Honestly, I think we took a step backwards with these changes. By trying to shoehorn players' Colonies into the same small shoes the Faction Colonies were put into, I agree that we've basically ended up with stuff that feels a little absurd, honestly.
The issue here is not the size of the Industries as choices, per se. It's totally reasonable to have, say, a planet that's super-specialized in terms of exports; a mining Colony, for example, might have a population of millions, but it exports only Rare Ores in giant amounts.
What makes this absurd-feeling is how the current systems translate into gameplay.
There's a lot of absurdity in larger Colonies not having significantly upscaled military capabilities, defense against Pathers, and reasonable profit margins. A Size 3 colony in 0.9 with all of the Industry check-boxes ticked could, magically, have enough military forces to see off small Pirate flotillas, which seemed reasonable (surely a few thousand space-colonists could get in their Hounds and defend their homes). But it doesn't translate properly with scale. A Size 10 should be able to dominate its System and all of the nearby Hyperspace without even noticing the costs. Let alone what happens if it mobilizes for offensive war.
Moreover, we're not even at the point where we can declare reasonable / meaningful military goals yet.
A Size 10 should be able to send out endless armadas, not some little fleet we'll be annoyed to have to cross the Sector to face down. And players shouldn't have to waste an Industry to have it merely able to defend itself properly against anything short of a Faction deciding to send Armageddon. Seriously; the other Factions shouldn't even bother, if they're not ready to wage a full-scale, no-holds-barred war.
We should have budget priorities we can set for guns-vs-butter, instead, that result in reasonable outcomes. I think a major mistake here was making military / police an Industry in the first place, just like Commerce and Way-Stations. It looks like a mistake now that Industries have been so pared back, anyhow; it looked pretty reasonable before.
I think it can be presumed that anywhere humans establish an interstellar outpost, if it's home to thousands, it has the capability to refuel incoming ships, has at least a few security forces and small-arms in lockers for real emergencies, etc.
It just shouldn't be possible for Pirates to Raid anything larger than Size 4 without devoting large armadas to the job; a Size 6 should be pretty much immune. Same goes for Pathers; they really shouldn't be a serious problem after a certain point, unless we're going to give them magical powers (maybe they like biological-warfare weapons for cases where mere sabotage won't work, for example; but then I want to be able to AM-bomb them out of existence and without diplomatic consequences, if they're straight-up murdering my civilians to cripple my economy; I think it's already absurd that they can get away with Acts of War without extreme consequences, and in my 0.9 game I ended up nuking every last one of their Industries to keep them crippled).
I think that Industries being small in number like this means that a lot of the basic things we expect Colonies to be able to do for themselves (like basic defense, police work, etc.) need to be on budget sliders, where we're able to eat the profits (or money allocated to population growth) to meet the goals.
I don't want the game to feel absurd, where giant populations don't have similarly-giant resources at their disposal; while we can make the case for a few places being huge but relatively weak, it's all relative; India may not be a superpower, but its military would roll over the Maldives without breaking a sweat, in the real world; what stops them isn't capability, it's consequences vs. the value of the conquest to them strategically.
Lastly... if big Colonies simply destroy the power curve, just make population growth slow down a bunch, or something. Frankly, I'm on the "who cares" end of the segment, in terms of "balance" here; I don't think money should ever be a serious balancing tool for this game; I think that exterior threats should be the real issue, taking us back to the core loops of the design (i.e., like it or not, serious conflicts are going to be about players' ability to win fights, not out-spend their opponents). In an end-game scenario where, say, the player's Faction decides to take on all of the Factions in the Sector, the player should just lose, as endless waves of armadas arrive at their colonies.
If making things difficult on the high end when the player has established Colonies, they're nicely profitable, and they decide not to engage diplomatically, is the goal... simply make the Factions behave as they now do until the player attacks them with AM for the first time... then the gloves come off, the Faction starts deploying much larger military forces... and what they send at your Colonies won't be a joke. Players will then get ground down economically simply replacing ship losses, at that point, and it's a question of taking damage at home or taking the war to the enemy.
Right now, it feels like violence as a tool of diplomacy is hugely in the player's hands, and tying those hands with Money isn't going to work out, if the player's fleet, alone, can be expected to take on the worst a Faction can throw at them, for cheap or even at a mild profit.
If you make the Hegemony mad enough to send a real invasion fleet, fighting it with a solo player fleet shouldn't even be a realistic option; it should be something like 20-30 armadas, and sure, the player can grind them down, but that means leaving their Colony vulnerable. To defend against that should require warning that it's coming, huge spending on military preparation, and Colonies big enough to pump out a similar volume of ships. But not a Military Base, etc.- that should all be presumed to exist, because a State without a military isn't a State very long, generally speaking.