As I understand it...
1. Does the computer use the available ability points for the players controlled by him, or should I do it for him?
Most races have their points allocated by default, though in the case of those with points left over I believe the computer assigns them in a semi-random manner.
2. If I want the players controlled by the comp to be something else then federalists, should I do it myself, or the comp would be able to choose?
I think this is preselected by race, or at least certain races have a high chance of certain governments, and little or no chance of others. I've never seen Drengin pacifists.
3. If I let the aggression at 50 for a comp. controlled race, would the comp. modify it?
I believe aggression is determined by race. Drengin usually have high aggression, while Torians are less aggressive. Again, pretty sure this is predetermined, but I may be wrong.
4. And my last question: If I choose "Randomly Pick Races", will the comp. create random races controlled by him using the same variables as I do?
It will select randomly from the available races, both those which come with the game and any custom races you have created.