What are you supposed to do with the overgrown nanoforge?
I'm wondering the same thing. I used to suppose that with a fully develop faction (I'm playing with Ind Evo) with all reseached technologies I would be somewhat able to counteract the malus but no, it's just too severe. Like I'm going from 5xx% fleet size with 1-2 smod per ship to 1000% fleet size with 3-4 dmod with all quality giving options cranked to the max. It just doesn't feel worth it. Yes I'm doubling fleet size, but they are all full of crap. I have the feeling that I should have left the nanoforge on its planet and try to just optimise production that way. It feels bad given the amount of money (even if it's kind of irrelevant given the size of my empire now) that I had to invest to cull it.
The best usage I found so far is to slap it on my BioSynth Laboratory to produce an ungodly amound of recreationnal drugs, but in in the end it's limited by the accessibility of the market (and the fact that it increases the overall hazard rating) and only represents and increase of around 35 000 / month.
In my opinion the item is really underwhelming in this state (actually I found it quite underwhelming already before the nerf, only good when my faction ship quality was already terrible at the beginning of a playthrough).