I'm coming here with a desperate plea for help.

This evening I felt like playing another round of ES2, and - as I don't think I am a really good player at this game - went with the "Easy" difficulty. Picked Craver, first rounds went nicely down the road.

At some point, a pirate lair spawned at the only exit of my node. And this is where my troubles began.

I assumed, with an early military focus of the Cravers and the huge advantage because of their fleet size, I could be able to crush the lair while it still was level 1. Big mistake. The high respawn rate of pirate ships was always breaking my siege, and the lair kept on leveling up. I focused my research on new ship hulls and military tech, but at some point, the game turned into an arms race against a pirate lair. The moment I felt my troops got an advantage, the lair usually leveled up and crushed my new wave of attackers again. This vicious cycle continued until it reached level 5, where a size 5 fleet of the pirates singlehandedly obliterated my size 12 fleet led by a hero, all based on the second-biggest attack ship design and Tier III in the military tree.

At this point, I just gave up. I poured tons of research and resources in overcoming a pirate lair, 2 of 3 of my heroes were wounded, and behind the lair, the Empire grew and grew, safeguarded by pirates that apparently owned a fleet that would rival the Deathstar.

So please, I'd like to hear from you: How should I handle pirates? This game was massively frustrating, because nothing is worse than getting destroyed on the easiest possible difficulty by a non-major faction.

It seems that it is a relatively common mistake to attack Pirates too early... 

At first, you need to have a fleet with quite an advantage over the Pirates, as they seem to get updates quicker than you do to begin with.  Wait until you're sure you can beat them, i.e. defeat their fleet(s) and defeat their ground forces.  Do not be tempted to try too early, as all you'll suceed in doing is to lose a fleet or more.  Especially be patient when you've just got medium ships, as theirs will probably be better equipped initially.

If you're a beginner at the game, I'd recommend making sure Pirates are on easy difficulty until you can, at least, handle normal game difficulty with your faction of choice.

Pirates are very well implemented in ES2, and are there to keep you on your toes!  Don't make the mistake of underestimating them!