I havent really bothered with it, but at first glance of the FL Files.
initialworld.ini controls Faction Relationships (My guess, is in the event of NPC Hostilities, this will determine who they attack first. Going from the faction of lowest rep, to the faction of highest rep).
Taking Order for example:
rep = -0.65, fc_n_grp
rep = -0.30, li_n_grp
Order NPCs will attack Nomad NPCs and tagged players before attacking LN NPCs and tagged players if there are Order NPCs, Nomad NPC/Player, and LN NPC/Player in the same area.
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empathy.ini effects the changes in faction reputation whenever a ship is destroyed, mission completed, mission failed, or mission aborted.
event = object_destruction, -X (reputation will drop by X due to destroying a ship of this faction)
event = random_mission_success, X (reputation will increase by X for completing a mission for this faction)
event = random_mission_failure, -X (reputation will drop by X for failing to complete a mission for this faction)
event = random_mission_abortion, -X (reputation will drop by X for aborting a mission for this faction)
empathy_rate = <Faction Internal Nickname>, X (reputation for this faction will increase/decrease by X% of the increase/decrease to the original faction)
Completing a mission for the LN will increase LN Rep by 0.09
Reputations for LSF and LPI will increase by 0.027
Reputation for Xenos will decrease by 0.0225
Destroying an LN ship will decrease LN Rep by 0.04
Reputations for LSF and LPI will decrease by 0.012
Reputation for Xenos will increase by 0.01