would it be possible to change Racial status (in SM mode obviously) - ie start off with NPRs in Player control mode and subsequently assign them to AI control mode and vice versa? There would of course be some issues with this (you would have to be able to see the existence of all races in SM mode again, as opposed to the curent situation where you dont know how many races are out there).
The reason I ask is that I did carry out your suggested method a few campaigns ago, but found that I was overwhelmed with minor races after about 15-20 years. I would possibly have kept going futher had I been able to hive off some of the smaller ones (then again it was a particularly fecund galaxy - practically everyone who developed WP tech found another race within 2-3 jumps)
One way to reduce the problems with this is to make the nprs automatically somewhat smaller than the races that are intended to be the primary races. On the game details screen you can reduce the chance of their being an npr, and you can change the relative size of the npr. If you make them 50% of normal size, they will not be expanding much to start with and their tech will be more limited as they would have a smaller population.
It is not a perfect fix, but it should help while you try to get a handle on all the other races out their.
Brian