I'm liking that diplomacy model - seems like a good simple starting point, but one that should have a lot of options to create good gameplay.
That said, I'm going to OCD about one thing. The formula:
> Diplomacy Points = ((Diplomacy Bonus * 4) + 1) * 100 * (1 – (Target Racial Xenophobia / 100))
should clearly read instead:
> Diplomacy Points = ((Diplomacy Bonus * 4) + 1) * (100 – Target Racial Xenophobia)
(Yes, I'm aware that this is totally irrelevant, and that I'm being obnoxiously anal-retentive)