I played around with this in a few test games last night.
I think this method of play is a "challenge" on Gigantic and Huge with virtually any AI level, and on Large maps it is also a "challenge" with AI's of "painful" and above.
However, below that in AI/size I think it is more of a strategy than a challenge. Here are the key points to the strategy:
Race choices:
Thalans are an excellent choice for the large starting planet and miniturization bonus. However, any race should ultimately work.
Ability bonuses should be chosen from among the following:
Influence, Population Growth, Morale, and Social production.
However, any non-military choices have the potential to work, for instances diplomacy instead of Influence if you wish to go that route.
Goverment = Pacifist for Influence win, or as appropriate for Alliance or Tech win.
Planets:
Standard planets, many of each:
PQ 6 and below = all research buildings.
PQ 7-8 = 1 factory, 1 farm, 1 morale, and then alternating banks and embassies.
PQ 9-10 = 1 factory, 1 farm, 1 morale, alternating 1 embassy, 2 banks.
PQ 11-17 = 1 factory, 2 farms, 2 morale, alternating 2 banks, 1 embassy.
PQ 18-25 = 1 factory, 2 farms, 2 morale, alternating 3 banks, 1 embassy.
PQ 25+ = 1 factory, 2 farms, 2 morale, alternating 4 banks, 1 embassy.
Of course, in all cases except 6's and below, use special squares as much as possible, especially research, cultural, and morale ones.
Specialized planets (1 each):
Home Planet: manufacturing capital, 1 morale, and all factories.
Tech Planet: PQ14+ (or tech bonus equivalent), 1 factory, tech capital, 1 entertainment, and the rest research buildings.
Economic Planet: PQ14+, 1 factory, economic capital, 2 farms, 2 entertainment, the rest banks.
Specials Planet: PQ14+ (or factory bonus equivalent): 8 factories, 1 entertainment, All others squares used for trade goods and other "Wonders".
By the time the "Specials" planet runs out of room you should be able to pay cash for anything else you want to build. Just do so on the next planet you steal from an opponent.
Colonization strategy:
Send your Flagship out to survey.
Land your Colony ship, have it take off again, and send it to the star system of your choice to look for a good planet.
Raise taxes to drop popularity to 60% or so.
Raise spending to 100%.
Lower Military spending to 0, making research and social each 50%.
Buy a factory each round for 4 rounds. Then let the factories build themselves until you have only 1 left to build.
While this is going on research up to the impulse engine, sensors, and either basic miniturization or another level or two of engines.
Once down to 1 factory left to build set your military to 1%, social to 66%, and research to 33%. At this point you should start producing colony or scout ships, your preference, but produce no more than 3 scouts before working on colony ships. Either way use your research to design as fast a colony ship as possible and start producing them continually, upgrading them for speed and/or distance as the technology to do so is researched. Rush out as many as you can taking the best planets along the way until you have captured the biggest sphere of influence you can. Then begin backfilling your colonial areas planets from largest to smallest. During all this throw out the occasional construction ship to grab resources as needed, but don't build ANY influence, economic, or military bases.
During all this keep researching faster engines whenever possible because your frontier will get further and further away. Also fill in all general research whenever possible, and do the occasional bit of weapons research. Do not research production improvements until your colony production time gets up to 4 weeks, because once you do research that your military production will shut down for 1 week for every factory on your home planet.
At some point during all this you will probably run out of cash and start going negative. If you do so just lower spending and keep plowing forward with colonization as fast as you can. Eventually the planets you colonized earlier will complete all social building, and since they have no military building to do every penny of social spending on those planets will roll back into your treasury. As this percentage of completed planets grows your losses will start to shrink, you will be able to raise spending again, and after a while you will be making plenty of money and can lower taxes and make your people happy again (75%+).
Once you are back in the black consistently, and your cash is growing faster and faster, start dropping social and raising research. Go back to 49/50 and leave that alone for the rest of the game (most likely).
Once the colony rush is done produce construction or trade ships for a while while also researching and trading for military techs. Once you have some decent military techs build some ships to get your military rating up so you don't get attacked.
Once your military position is reasonably secure start focusing on cultural influence techs (or diplomacy or good/evil to become neutral and get learning centers, if that's your thing). Also improve your various tile improvement techs like farming and economics when reasonable. Keep in mind though that once you finish such a tech your income will drop a lot because almost all your colonies will studdenly switch from feeding your coffers with excess social production to using that production for the new tech. So take your time between such projects so you don't go negative for an extended period (though after a while even this won't put you negative).
At this point you hopefully have the strongest economy and influence in the game, and the ability to generate a decent military if needed. From here if the game isn't already effectively won, then a few well placed influence basis should finish it off for you. Also once any planet if finished with all upgrades (which would be fairly late in the game) you can roll the factory over to something else useful, like another embassy to make your influence rise even higher.
This strategy can also be extended to work on huge and gigantic maps by building 1 additional production center and starport at the far end of your initial territory on a huge map, and 2 on a giant map with another to follow in the late game.
In all cases, this strategy won't do well for an attempted military conquest on maps larger than a small one not because you can't build a strong enough military, but because you can't use troop transports effectively enough..... Although I suppose if you spent the entire game stockpiling troop ships every time your home system population is nearly capped, and used the ships to move population to other planets to grow your colonies faster, it would be possible. It just seems like a really annoying way to try to play.