I've had the Dread Lords mega event seven times: 4 on DA and 3 on TOA, and I can say that they are definitely a serious danger if allowed to build up on TOA. I think that they have been improved, but the bigger factor is tech inflation: given that military technologies are hardest hit, the possibility that a civilization will be strong enough to deal with the Dread Lords easily by the time they show up is remote.

Leaving the DA games - where they were always easily dispatched, by me or the AIs - aside, my encounters with the Dread Lords:

• As the Arceans: This was on the Milky Way custom map, which features Dread Lords starting at the center - since these ones were also a legitimate threat, this means that the game has effectively been a war against two Dread Lord civilizations existing at the same time. Nasty. They haven't had much luck conquering planets, though - the original Dread Lords did invade Altaria, but they didn't manage to take it, and since then none of their transports have ever gotten through. So they're containable.
• As the Altarians: I received the message about their arrival in 2231. It's now late 2232, and still no sign of them. I've been exploring to find them, but the bigger issue is my alliance's war with the Drengin - I'm glad not to deal with the problem for now. They are out there somewhere, though.
• As the Torians: I will probably eventually AAR this game, so I won't go into details, but this was definitely the most dangerous group of Dread Lords I've seen outside of the campaigns. They popped up in the middle of Terran space, and I convinced the Terrans to make peace with them to see what would happen if they got a chance to build up. It was a big mistake - they soon built a dreadnought with over 800 points of beam attack and went on the rampage. They never posed an existential threat to me, as they were too far away to realistically conquer me (and they only ever took one planet - Mars - at all) but they were a very serious problem for one reason - they were much closer to me and my allies, like the Terrans, then they were to hostile civilizations such as the Thalan, Iconians, and Altarians, meaning that while our civilizations were constantly getting attacked, my rivals had a chance to build up. Eventually, I took out the dreadnought (at the cost of 18 ships!) and a coalition of myself, the Terrans, and the Akilians conquered them, but it was a rough couple of years.

I don't seem available for normal games

The DL event seems to occur when you become substantially more powerful than the AI players.

In my last game, it happened when I invaded an AI planet on the other side of the galazy. All of the sudden they appeared and ever time I sent a transport ship out (even when it didn't go near the DL planet), they would destroy it.

I once had them show up about 2 years into the game, But then for some reason the game decided it didn't want to live anymore and crashed.

  So did I,  but I'll be a little more careful now.  Same with those other minor races that appear (Vegans,  Paridians, etc.).

  WOuld you believe it,  in my current DA metaverse game:

...about 2 turns after they appeared in the game.

That would make a VERY funny comedy(?) scene!

"Oh great and mighty Dread Lords! Your most pathetic followers have made this sacrificial offering to quench your thirst for blood! In return, we request you to smite the Iconians like the gods you are!

And we hope you won't kill us!"

  The DLs seem to be attacking my enemies in this game;  perhaps I should give them a colony ship?

The only good Dread Lord is a Dead Dread Lord! lol