Yeah I think the people who say this mission is too difficult are missing that bit: If you pick the "correct" option at each interrogation question, your cover-blown does not rise at all, meaning that with the 2% per turn rise you have a full fifty turns from first contact. And the AIs are scripted to never declare war on you until you lose your cover, so you have fifty turns to do literally anything, including run around with only 6 units...
There are two main strategies, one with full stealth and one where you plan to declare war. Both will require you to pick the right choices, but you can just save/load to check.
1. Stealth (easier)
The AI will scout you within the first 10 turns even if you try to stay out of contact. So your time limit is 55-60 turns to complete the story quests up until you blow up all 5 reactors. It's not that difficult when you consider that neither enemy will ever declare war on you and you can use that to your advantage by fully devoting yourself to expanding and doing quests. Once you blow all 5 reactors, the cover-blown will stop rising, the two will declare war on each other and you have free reign to do anything you want.
Note that the quests might be unprogressable if you triggered them before the bugfix. Try not to colonise the sectors involved to avoid triggering this bug.
2. War
The arctic start, with low energy and close to zero food, would be very harsh on a normal game. But with 55-60 turns of guaranteed peace? You can completely ignore that and become the god of research (and cityspam until your continent is full). You don't need to make the quests a priority, but they aren't that hard and sometimes give something useful as a reward.
Expansion-wise, it's actually not that difficult. Central Biofarm + Economist + 4 food workers is more than enough food for any city to reach 16 pop in a timely manner, and this is ignoring the abundance of aquatic sectors, which are fantastic since the buff, and exactly what an arctic start needs. A level 1 aquatic sector, with no upgrades, gives 30 yields (10/10/10) including the food and energy that will be scarce for you. Compare that to a fully upgraded land sector which also gives 30. The specialisations don't give any special abilities, but they give a lot more raw yields than land sectors too: 2 level 2 aquatic sectors with specialisations give 118 yields baseline and 10 more for each food/energy/research land sector, i.e. the equivalent of 4 fully upgraded land sectors with no specialisation. Add to that the Reef/Tectonic/Sunken features, which give even more free stuff.
So the plan here is just econ the crap out of the first 40 turns, plan your research to hit specific units/mods and get your doomstacks up and running (production is easy with arctic mountain sectors) before war hits. Conversely, your opponents are stuck sharing a continent with poor research prospects - you should faceroll them when the time comes. You can econ/research even faster by infiltrating the Dvar and grabbing Factory Overdrive and Mountain Breaker.
For doomstacks, I recommend a 1:1 ratio of Refractors (Sequential Kill and another damage mod) and Tacticians (Nanites and Xeno Defense). That lets you pop 3 super AoEs on turn 1 which should wreck most AI stacks and militias. Your heroes can be included in the stack as they can fill either the Refractor or Tactician roles. 2 stacks of these should be able to wipe the map clean with no losses.