The DL event has always been dissapointing, IMO. They show up naked and are pushovers if you get to them in any kind of reasonable time frame. The only way they become a threat is if they pop up early in the game and you can't FIND them until they've had some time to get a head of steam. They should really spawn with some defenses, I'd thought that was going to be done in TA but it wasn't.

I've never understood the appeal of deliberately hamstringing yourself. A challenge is only satisfying to overcome if it wasn't preventable, otherwise it's just some bad thing you let happen that's your own fault.

I've had them spawn in the middle of an enemy's territory, one I was currently losing a war with. Apparently said enemy decided they weren't a threat, so they never attacked them. It got a bit hairy for a while, until I made peace with the major civ, who then turned on the Dread Lords. A few turns later, the Dread Lords contacted me, asking for help. I sent help, all right, in the form of a transport

Well I know I got the dread lords event and I ended up with a 44 class heavy planet with little effort

What bug?

I can't speak with the DL, and they've neer sokpen to me, but I've noticed that some AI races occasionally manage to make peace with them.  Is that how it's supposed to be?

The Dread Lords start will ALL tech (in DL/DA; in TA they start with the stock minor civ tech tree completely researched). The limiting factor is how fast they can build a planet full of Industrial Sectors to crank out ships. They don't need morale, or farms, or apparently money - a fully built-up Dread Lord planet has a colony, a starport, and Industrial Sectors.