Mmmh, well, one answere.
I'll try to elaborate a bit in which direction I was thinking.
Protection for much weaker players against much stronger ones is fine.
But should there be a morale loss at all when fighting equal or stronger players? Or isn't this what should be even encouraged? Last time I checked Imperial Conflict was STILL not renamed to Imperial Sim City.
Encouraged Style of Game Play
So let's define how we want IC to be played... this we want to encourage or at least we don't want to hinder it in any way.
No morale applies when:
Players are roughly equally strong.
Roughly equally strong I'd translate into: something within +/-20% to each other (adding up to a 40% difference) to allow for different strategic approaches to buildings, units and different tactics.
Families want to fight each other by mutually declared war.
No exceptions there. It's a team based game and in a war all members of the families are participants as well as legitimate targets.
A weaker player attacks a stronger one, it's his or her decision and in doing so any resulting fight is in mutual consent.
A limit for how long morale is off for the stronger player is probably wise: either a fixed number of counterattacks (3?) or a fixed time (24h?) after the last attack of the weaker player. This also fixes the problem that stronger players feel a bit helpless against attacks from smaller ones because counterattacks are too expensive.
1. General rule: No morale applies when fights or wars happen in mutual consent or happen between competitive empires.
Discouraged Style of Game Play
And now the other side, obviosly this seems to be what's called farming. This describes a situation in which the attacked player is a lot weaker and has no real fighting chance. That's why it's called "farming": the stronger player attacks without risk for her- or himself: no fun but highly depressing and the usual excuse is that the economics of the game encourage such behaviour and players see no other way to "win".
The important things are: Nobody likes it but the game mechanics even encourage such behaviour to win... and player ethics are too weak not to fall for it (I like to add). That's not good for any game.
It comes down to, o surprise, the opposite side of above list.
2. General rule: Morale does apply when fights happen not in mutual consent or not between competitive empires.
The bigger the gap between the empires' strenght rating, the progressively higher the loss in morale should be. As a variant morale is no integer but a percentage of 100% and the loss of morale could very well be subtracted before the attack and the remaining morale be used as a multiplyer to the attacking units' strength... just to make sure that this playing style is really nolonger "economical".
Determining "strength"
After this set of definitions still remains the most difficult thing to be solved.
So far I have written "weaker" and "stronger" player. The tricky part seems to be how to assess who is stronger and who is weaker or rather how to implement an algorithm that cannot be as easily misled as when morale was completly planet based. Without the present algorithm known and no charts it is difficult to think about a solution.
What about switching for determining the strength of an empire completly from size to NW? Are there obvious loopholes which can be exploited to an extent that morale has no more use?
Or differently phrased: What is the logic behind using a mix of NW and size now?
Misc: Just to make sure
Above suggestions apply for attacks with the good old military units.
Ops and Spells
Those follow a completly different logic and morale is of no use because usually neither size nor NW can determine the relative strength of the attacker in comparison to the defender.
Instead of moralizing spells and ops, they should be sorted into 2 categories:
Reconnaissance, misinformation, spells on self like space amazement or no fear etc.: Just the usual difficulty percentages apply.
Attacking/offensive ops and spells like destroy units/portals/cash or hurricanes etc.: Apply the usual difficulty percentages AND use a counter that after each successful attack sets the difficulty progressively higher for the next attack. The counter goes down after time. The basic concept is very similar to morale but not based on size or NW but on successful attacks which is a lot more fitting.
Another old bloodstained Harkonnen.