Agreed, Warlords used to do this.  When it's obvious you're going to conquer the world, the others should just team up against public enemy #1.  They can resume their squabble after they've put you down, but of course for you the game would be over so you wouldn't get to see it.

I think a diplomatic modifier would be a good way to get the desired effect. I doesn't matter if the AI you are destroying is a friend or a foe with the other AI's. As soon as other nations witness how you completely obliterate another realm and its sovereign they witness your warlike nature and become more wary. This could be a modifier to the already existing diplomatic modifier about army strength. A large army of a peaceful country is far less scary than a large army of a sovereign who has already proven to the world that he/she will use it to destroy and conquer.

First war is not a crush or be crushed affair. War can be stopped after some cities have been (re)conquered or you let the enemy live on with only a small realm. Second it should not be the case that everyone else goes to war with you immediately but that they are wary of your actions from a diplomatic point of view. In Master of Orion and other 4X games for example the other races are more inclined to gang up on you after you use biological weapons. In Elemental it should be similar with exterminating a sovereign.

Which part of "A FEW FACTIONS" is not clear in the title of this thread?

You can win a war and that's OK but if you start to methodically destroy anyone you meet, that's a bad sign from any point of view, besides that is coherent with what would happen if you played against human opponents: If you have an expansionistic attitude the other human players will certainly attack you before it is too late, or they would just do it because they don't want you to win!

But with your kind of thinking you don't improve the AI: you expect the AI to be realistic when in fact we, as player are not. We just want to win a game.

I would say it depends more on how many other factions were killed.  If I was the elves at war with Saruman and I witnessed Sauron kill the race of men and then kill the dwarves and then kill Saruman then obviously I wouldn't be so happy to see Sauron.  Any race which has killed 3 or more factions should be viewed as a threat unless you have allied with them.

I tend to agree that diplomatic victory needs to be reworked.  All you need is one hold-out and it's impossible to do, and really the AI should be holding out if it knows it will just be handing you the win.

I've never seen Diplomatic victory done well in any game.  It almost always boils down to a vote.  If anyone gets enough votes to win, then everyone else dies.  Why would anyone EVER vote for anyone but themselves?  Anyone who does vote for someone else is essentially committing suicide and trying to take almost everyone else with them.  In essence, it's a spiteful defeat condition that leaves one man standing, not "diplomatic" or a "victory".  In our case, we vote by making alliances, so there is some reason to vote for someone else (problem 1 solved).  The problem is, anyone who makes the last vote is essentially committing suicide and taking everyone else down with them (problem 2 is as bad as ever). 

I think perhaps the best mode of diplomatic victory would be to allow for diplomatic annexations of rivals, and then leaving this as a subset of the "conquest" victory type.  This would still mean you'd have to be careful of who you make alliances with, but it wouldn't make this quite so spontaneous or artificial.

As to the main topic, I think more to the point is that weaker factions should be coming to each other's aid if they're attacked unprovoked.  Don't wait until after the battle is over and the superpower faction is getting ready to declare war against you anyways.  Jump in and help your weak allies while they're still around to help you beat the stronger faction!