I don't think Alex wants to give the player any reasonable excuse to justify a saturation bombardment.
A bit too late for that, as it's justified in the interstellar community if you set up shop in another faction's claimed territory, even if they are cooperative and the territory is unihabited. Likewise, with a little bit of propaganda apparently even fuel market competition is a justifiable reason.
Unsurprisingly it's a bit like real life. The big players have control over the flow of information, smaller players and the public at large are kept too busy to even notice if a civilization gets wiped out. With the exception of course if a genocide or "genocide" is spammed in the public's face via controlled information sources. Propaganda can further be used to prevent the public from recognizing uncontrolled information sources as legitimate obviously.
You have no reasonable recourse for what is an act of war. Nobody will ever listen to you, if they even can. So only unreasonable options are left, which by virtue of circumstance are now reasonable.
You can weather the storm and get some trinkets from it, in return for pretending it never happened. Lore wise, it will undoubtably happen again.
You can capitulate to unreasonable demands made by suicidal power mad fools. Who lore wise will make more unreasonable demands.
Or you can paint the sector red.
All options are reasonable, all have their own benefits and drawbacks.
Still a reputation malus rather than forced hostility is better for the third option. In the end the player can only make the other factions so angry, and can get back to 100 rep by giving away AI cores, so all it really would do is reduce grinding.