Yes it works either way really. But again I think the real problem is managing how things work in BIG games. There needs to be some way to scale things. For example,
for testing today (the dreaded black screen on invasion bug) I am running medium with a half dozen major opponents. No problem there. But in my excessive games with 26 opponents, I was piling up a ton of those things. Clearly not right, I admit.
Balancing is a tough process. Like a teeter tooter sort of thing. Way up, then way down. Getting it so both riders are level to each other takes a little time. And the other guy as to help!
That is really the problem with many things, isn't it? This is one of the things in CIV V I kinda laughed at. So, if I have gems or whatever, I get +4 (or whatever your difficulty was scaled to). I think to myself, why would 20 cities be as happy as 4 cities for a finite resource? Again, simplicity. The bigger the empire, the more resources, ergo the more happiness to counter the bigger empire. No matter what, it is a brake on expansion.
I would like to see something that for every conquest, your approval goes up and every loss, it goes down. Same, but with less effect, with fleet battles. People don't mind hardships when they are winning, losing though....