Reason: Morale debuffs hurt tall empires A LOT MORE than wide empires. The more population you have on a planet, the more the morale debuffs hurt.
LEP should be -0.2 Money/Planet. A TALL empire with specialized worlds can easily afford the LEP, but a WIDE empire that over expanded would see its economy collapse. At about 40 colonies in the early game, expansion becomes a net loss.
Expanding to 80+ colonies with the NEW and IMPROVED LEP system requires Thalan Hives Tech and very careful planning (Colonizer + Prolific + -20% Maintenance, +2 Speed, +2 Sensors, +20% Economy, +20% Ship Hull Capacity, -30% Colony Module Size, allowing Tiny Hulls with Colony Modules).
Managed it, but I had to make most of my core planets into marketplace worlds, using colonizer to build shipyards on my fringe worlds and pumping out tiny hulled colony ships to colonize the neighborhood. Also, I had to trade for credits from the AI otherwise I would have gone bankrupt at 60 planets.
I've tested it. It works.