Even as a very pro-Hessian side player, I do kind of agree that the Hessians are over-playing their hand a bit. In the next version, they are going to be blocking the Corsairs in all of the Northern Omegas to slow them down in Bretonia, maintain the blockade to the entrance of Rheinland, and push into Dresden to finally claim the system as a symbol to Rheinland. I'd say the latter should probably cost them somewhere else, and with the Mollys forcing the Corsairs away from Dublin their main enemy would have to focus elsewhere. Possibly make a stronger foothold in O-49 or -47 as a result.
As for the "why are we fighting in the Omegas?", the changes in the unlawful makeup of Rheinland should be a 'solution' of sorts. The Unioners working with the Corsairs gives them more of a route in through Munich and Frankfurt around the Hessian flank. As the Hessians said in a recent-ish communication to my VWA: "Rheinland needs its political leaders while we ensure the safety of the Volksrevolution in the Omega systems." The Unioners continue the greedy pirate RP, while the Hessians, Bundschuh and LWB become a tighter alliance in Rheinland. The Hessians can focus on the Corsairs, while the Bundschuh and the LWB fight a proxy war with the Unioners and Corsair raiders. We'll also have a big part in Dresden's fall in a similar vein to the initial Popular Revolution that spawned the Hessian movement.
Unfortunately, Rheinland ceding the independent worlds to Liberty will turn their focus back inwards, making it harder for the unlawfuls to operate. However, the effective loss of the war will dishearten the people's faith and bring more support for the Volksrevolution.
The Corsairs could do with an ally down in the Omegas, but their focus seems to be shifting to the north - with the Sigmas turning into a Hispania battlefield and the raids going into Rheinland alongside the Unioners.
The Kusari lawfulness seemed the most fitting, I don't really know what caused that to fall apart and if it would be started again. The Liberty thing I don't see quite so much.
JayDee, I believe the Colonials used to be ok with the Corsairs at some point but this has since been forgotten (you know what the old diplomacy was like...) Now they are rephacked hostile, and with CR's alliance with Bretonia and IMG I doubt it's going to change.