Thanks for all of the suggestions. I kept playing that game even though I only had about 6 star systems and figured I wouldn't be able to beat the neighboring empires, but I turned out to be wrong. What I had to do was reload the save a few times to play out some what-if scenarios to find out what I might be doing wrong and whether the alliances would help.
For instance, if I declared war on the enemy that was nearest me, any defense pact that I had with alien empires didn't have time to mobilize. The enemy would send a huge fleet right at me through one system point (I use hyperspace in-game only to add strategy to the game). My entire fleet was wasted pretty fast. So I reloaded the save & did not attack.
Later in the same game, another empire declared war on my enemy & invited me to join. So I saved my game & accepted. Here was the interesting part. I didn't see forces from either the enemy or the friendly alien empire actually attack each other. I put my forces at the choke point system & expected an avalanche of forces to come my way. Nothing did. So I moved my forces in and started attacked. Didn't see any help from anyone still. It was weird.
So I started attacking the enemy systems & then finally the enemy started to attack. It went around and went straight to my home planet. But then its forces would turn around to attack my fleet if I kept attacking their planets as I was already in their system. This back & forth kept going on for awhile. I was still a bit unmatched & they ended up successfully invading my home planet. I checked War Score & found my side was losing over a ton of small battles between the friendly empire & the enemy. We lost the war & my home planet was ceded. So I reloaded an auto-save just before the war ended. Sent my forces back in & took my home planet back.
The war ended with a loss again, however, I didn't lose my home planet. So I kept playing. Here is what happened differently. On subsequent battles with the enemy (and later his Federation), I had control of a large fleet plus the Federation fleet, I would send it all in and attack. I then noticed a large neighbor that I had a Defense Pact with also show up to help attack. So basically a 4-empire strong Federation plus a Defence Pact. The Defense Pact force would not send any troops in if I had a troop transport in the system already (although I assume some were on the way). After these wars ended, I would get whatever goals I had set. I just don't understand what caused them to become active.
One annoying part is that the Federation fleet kept trying to return to the preceding chairman's spaceport! If I didn't keep constant control on what it was attacking, it would setup a trajectory to head back, no matter how far that would be.
Lastly, I didn't give anyone in the Federation anything for War Goals. For a while, they wouldn't let me cede planets, but then later, it was allowing me to make vassals if I wanted & could afford the War Score. All of the ships in the Federation came to my aid as well as the Defense Pact..
Currently I'm not sure why the AI fleets started showing up. I think maybe there is just a time delay in mobilizing their forces & moving them. Or maybe it has something to do with hyperlanes? When I played warp in my first game back during Asimov, the allied forces would usually go straight to your system & follow your forces around. In Kennedy, they follow you for a little bit, but don't stick around. For instance, immediately after invading a planet, an allied fleet that helped in the bombardment would start going off to attack another star system, whether I was going or not.
I also noticed when an AI controls the Federation Fleet, they seem to get it killed pretty fast. They just throw it at whatever is in the way. I was in the middle of this one war using the Federation Fleet (with my own Admiral installed) to lay waste to a distant enemy's star systems. The Leadership then changed & the new Fed Leader took off with the Federation Fleet & got most of it destroyed before I could even react! After it got weak, it just moved that fleet out of the action & I was left with only half the strength to finish the war (fortunately the war was nearly over).
There should be a new game rule not to hand over the Federation Fleet until immediately after a war ends. At any rate, it's a very interesting game. I basically had nothing in the game but maybe 5-6 planets for a very long time & was able to turn it all around. Became a Democratic Utopia and liberating and ceding my way through the mid-game. I probably won't survive the end-game crisis. I can't imagine playing this game with Iron Man mode turned on. How do you ever find out when is a good time to attack?