Here's a couple quick answers, to the best of my knowledge. I don't always know the kids' or my wife's reasons, but these are the best guesses at some.
As for the older sis and biting off more than she could chew - I agree. She wasn't at all familiar with some of the parts of the game. She was comfortable with 3rd/R and 4th Ed. But she had always liked to run smaller empires and make her money off of freight lines, hiring out to the other players, and exploiting systems they didn't want. She stayed under the radar per se while the others competed for top dog. She made her money off low maintenance/small fleet, hid her warships in her FT's, and was a good commerce raider/deal maker. (Thank goodness she is an artist. If she became a used car dealer, the world could suffer for it.) In this game with the CP engines and small incomes translating to small FT fleets, she found her penchant for running FT lines was actually going to cost her money instead of make it. With no warp points to work off of, she didn't have any unclaimed territory to park on. The weapons/no drives made her FT-warships overly vulnerable. Her prior strategy just didn't work and for quite a while she was a fish out of water and really struggled. She persevered, but it takes quite a while.
The Chinese get hammered for a while. I don't want to give any spoilers, but they are the one to watch for the coming months. It starts to get REAL interesting starting with the end of November.
The US-Euro alliance gave them the biggest military strength, but they both operated small ships for the most part. They understood they were flying garbage cans with firepower. Against the Nemotians, they understood they were mostly a paper tiger without shields or drive fields.
As for income growth, they had gotten used to 3rd, and liked the slower pace of growth they used in it. It took time to emplace populations and grow them. Most of your income growth came from TL advances. After a 4th Ed with rather rapid growth, they were looking for a more TL increase oriented game. I think I put it in the preface (maybe not) that they were only growing on the 10th turns, and pop was only growing 1.5% every ten turns. The low FT fleets, and high cost (x3 normal) of shipping made moving more than one or two PTU a turn a real poor investment. Most CFN fleets were only big enough to move 10 or 12 PTU a turn a most. Building FT's for the Govt Pool actually lost money for an empire (the 20% going to EL research plus maint was more than a speed 1 FT made by a long ways. I allowed them to get x3 income for renting to keep it in line with CFN shipping costs, but FT's still lost money for you if you kept them). Slow growth, no money in FT's, and almost no settlement oportunities kept a tight lid on income for quite a while. I had also ruled that each planet/AB had to be individually surveyed (at a reduced cost in survey pts), so the only bodies past the main belt that were surveyed (in the first 10 turns) for colonization were the US Trojans - and they didn't want to be the only out system targets.
As for off earth bases, the SS of the US/Euro/China were all armed, but (I think) they had thought that it was going to be a game that involved more fluid competion for the outer planets, and then I am sure they planned to be jumping to other systems rather quickly. I think (don't know) that they had an agreement to leave each other alone inside the belt (notice no interplayer combats even when tensions were high or opportunities present in these first few turns inside the belt), and when they found the outsystem dificult to occupy, didn't bother with fortifying in those areas (it would have been a waste in my opinion for these first turns) - and didn't have the spare income or construction assets for a while to do it with the inner system. With their low income, the low maint of stationary defenses would have been a plus. On the other hand, with no tractors, they couldn't build and them move things to where they wanted. The mobile shipyard's build rate of 4 HS a turn was awfully slow, and made building a base in the belt a big gamble. I know the middle boy (China) considered it and talked to me about it. But he was sure that Ceres would get hit before he could finish even a BS0 (he was right). With shields popping up for him, bases dropped LOW on the priority list. REFITS jumped to the top.
As for this game, it is still going (at turn 93 now). It just isn't the only game going. My family has rather varied interests. We have two starfire games running at the moment with different themes (the other is about 40 or so turns in - I'm writing during my break and don't have anyway to check), a zombie survival game (the boys love it), and a game that includes the nine and six year olds with the big kids called Grimm based in fairy tales that makes all the players into 9-12 year olds (they all actually like to play, and the little folks don't feel so overwhelmed - the oldest girl runs a lot of that one, she loves fairy tales/is a big daydreamer/and makes some really cute and cool stories.) We have one other game that is kind of in the test stages (playtest), but I don't know if I can talk about that one publicly or not, so I won't for the moment.
As for the daughter absorbing non-aligned nations, I felt bad for her too - but it doesn't happen. Keep rooting for her though - she's a quiet and determined little gal.
Hope you enjoy the rest of the story and thanks again.