I've had factions DW and move on me early in the game...appears to me that AI is aggressive enough when the player's faction is equal or weaker in strength. So aggression/passivity may not be the root problem.

It doesn't take very many turns for the player to build up where neighboring AI factions are significantly weaker. Perhaps AI passivity is really a different manifestation of another fundamental problem...the AI doesn't build or expand well and quickly gets economically outstripped.