..."Weaker than a frigate"? No, I can't agree with that. Some of its options do, imo, underperform, but I've gotten pretty good results with a setup of ranger/grave/brawler, and even the worst of its setups can easily match up to destroyers (that, admittedly, are half its cost or less to put on the field.)
I think the demolition kit is probably the worst one for AI use; it does not like firing the grenade launcher at ships.
No, if you want an argument for buffing it, the argument I'd put forth is that, by the time you have the fleet power to acquire the thing, you're out of the portion of the game where it'd be most fun to play around with as a flagship - most of your fights at that point will be against cruisers and capitals, which the Virtuous isn't as effective against. I'd have much more fun with, say, a nex custom start using the thing.