Booo the diplomacy system in GC2 sucks uranus. LOL
No seriously though, I only ever use to it trade tech and basically that is pants! Stardock, come on do better, what about having a economic treaties, research treaties, free borders treaties, non agression treaties. The possibilities are endless.
Non-agression treaty could be the answer to all our border woes. Instead of just sitting there watching a fleet of transports near your homeworld and have fuck all chance to tell them to pack it in, you could have a non-agression pact that means that anyone coming into your area of influence would be open to attack for violating your borders. This would also emphasis the importance of influence, since it defines your borders and the area in which you can freely operate without fear of reprisals. If the ai in the NAP decides that your attack within your space wasn't acceptable they can break the NAP but can't attack for the rest of that turn. This stops NAP abuse immediately.
Economic Treaties could be a bonus or ever a pre-cursor to the all power freighters, before you can establish trade routes you first need to establish a economic treaty withthat empire, which encourages diplomacy and makes players think about the AI more than just a tech trade partner. Once the treaty is in place the freighters can stablish routes with that empire. I have NEVER heard of something as stupid as a country or race allowing another race to flood their civilization with goods without first establishing a treaty. Thats like china just showing up with 5million tonnes of goods to sell to america when america hasn't even asked for them! Thats just not on!
Research Treaties in times of peace when relations between 2 civilizations are at a good level, those civilizations tend to focus on combining their economic and intellectual might to strengthen both civilizations. Just look at the joint research project occuring internationally each day. Surely if the Humans and Altarians are allies they should learn fro one another!
Military Treaties, this is an idea I just had, what if to REALLY strengthen alliances you could exchange military ships with another empire and for a while control a ship belonging to them, in exchange they did the same to one of yours. A military experience exchange program. You serve as a ship in their military for a whiel to help defend their interests.
Joint Intelligence - Come on this one is so obvious! 2 Empires combine their intel gathering abilities to show what each one knows about the other empires. This program is realtime and is only achievable if both empires have equally worth intel on the the galaxy.
Random Events.... This one I love in the MOO series!
A Humans male married a Dreguin female increasing diplomatic relations!!!!!

Human ship rescues stranded Torian diplomat, the Torians salute the Terrans.
Humans xenoist assassinates a Altarian government minister our relations have fallen!
Come on these kinds of random events are brilliant and really help bring the game to life!
J