Land grab does have downfalls. It becomes extremely hard to manage as you keep growing.

But you are kinda missing the point on the game. The goal is to win by
A. Trading
B. Destroying Planets
C. Collapsing Stars
D. Holding Artifacts.

Land grabbing does help with a huge improvement in resource income, but If you play smart, you could make just as much by Trading with other players.

I personally did a land grabbing strategy and on burrows server own 250+ outposts and 15 colonies. It's sounds awesome, but it's becoming almost boring in the way due to a constant need to micromanage.

I think your real goal is to limit players on the amount of planets they can hold. Well Devs actually working on improving this by "hiding" systems that are not assigned to players. What does that mean? Let's say the cap of players per game is 1300 but only 200 players join the game. What it will do is hide the other 1100 systems so that there will be nothing to grab.
Conversely, if Devs set up a long sign up server and allow for more players to join, it will leave fewer planets to grab.

However, if the fix is needed for balancing. I'd say reduce the number of galaxies from 16 to 9. Also spread players evenly between each galaxy. I actually found completely empty galaxies and pretty much landed outpost on every planet.