I actually would say it is an exploit. There are times when the race in question simply isn't getting ships out all that fast, and battles take up little time on the solar map.
I've already had this one happen a couple of times. It's not too hard to do.
Maybe for peaceful races you can shut them down, but by year 5 the acutians already can make more ships then you can possibly destroy, and down the road other races could as well due to ship production bonuses.
And I still don't see how it is an exploit if you withdraw from combat after whittling down ships. The game already gives an option to do just that, for the very reasons given. Even if it is a possible to completely, I don't see the problem in devoting most of player influence over time in shutting down relations and power for one race when many others are doing their own thing. It isn't "free" time, it is time spent not getting resources (aside from credits) or influence (and actually this method will quickly go to the point of no return for said race). And the result of it being shut down a race is overcome by a race you want it too...isn't that strategy?
Yeah, the Acutians can produce them fast.... but in my experience, not fast enough. I can still utterly wreck their military via this. And it's not ONLY that; a player using this concept can combine it with other things that can slow or weaken the race in question and their ability to produce units.
The reason it's an exploit is because it can be done in a way as to where it's so stupidly easy that you can do it in your sleep. Even if their military force is large in numbers, I can still defeat the ENTIRE THING by simply popping in, killing 3 or 4 ships out of the entire battke (AKA, no effort or difficulty involved), and rinse and repeat. A major military force being defeated by ONE guy managing to force small fights over and over so he can just smack a couple of them around and then leave, over and over again, also doesnt even make sense. This game being the sort that it is, "not making any sense whatsoever" is something it needs to avoid.
And that's IF it is a large battle. It's possible to get the AI locked into repeated fights where it's not you popping 2 or 3 ships out of a group, instead it's that 2 or 3 ships ARE the entire group. It gets even more easy.
Beyond that though, there's another bit involved, which is that it's also a form of grinding.... another thing this game needs to avoid. This is a grand strategy game, not bloody Disgaea. Strategy, tactics, and careful planning and thinking are supposed to be the ways to accomplish everything. Instead, something like this can be done at times, and it's like grinding in Disgaea, popping into the same maps VS the same jerks with the same low or non-existent difficulty, and just repeating it until your goal is complete. It's not a good thing for players to see, and it can definitely lower someone's opinions of the game (this ALWAYS happens for me in most cases, as I see the mere existence of grinding in most any game as a nasty design flaw).