Bit of a frustrating one here... seems that Deidre's preferences are a bit cocked up, whenever I have the social engineering for a planned market she repeatedly warns me about it's excesses and eventually goes to war with me.

Given that she's supposed to hate free market because of the damages to planet it does it makes no sense that for whatever reason she's now flipping her lid over a planned market.

Not only that, while it might be the difficulty, I've noticed that with tier 2 weapons her heavy inf is ripping through tier 2 armor like it's tissue paper on offense (the defenders having tier 2 armor) making it nigh impossible early game to defend against her... as Santiago no less... making for a frustrating situation.

Don't know how my install could have gotten muddled up like this but it has, unless it's some kind of troll install from GoG...

There is much more going on under the hood than just social engineering policies when it comes to determining who is friendly or hostile. If, for example, you are first in score by far, then the factions holding second and third place are much more likely to ally against you.

And, of course, their choice is Green, not Planned. Planned is indifferent to them, but the +1 to industry of Planned can easily make you pollute more than no policy at all, and make the Gaians like you less.

Regarding combat, I assume we are talking about units with equivalent morale, right? Because I find hard to believe the Spartans +2 morale base would lose to unmodified Gaian units, no matter the game setup. I don't even know what that means...

Not sure what you mean with "Tier 2", as that is not any term in the game.

Combat is determined by "power", which is determined by the Weapon of the attacker and the armor of the defender, which you seem to understand. That is then further modified by various factors, including morale (which Santiago should have a serious advantage on), and also factors depending on where the unit is located or what it is attacking.
Infantry, for instance, gets a bonus when attacking units stationed in a city, which can somewhat offset potential benefits the defender might hold (like a sensor array nearby, perimeter defense...) . The other early game unit, speeders, instead get a bonus when attacking someone "in the field", meaning anywhere but a city (or possibly bunker), which can offset defense bonuses for certain terrain types (mountains / rocky for most units, but there are more).
Not sure what you are referring to as "heavy inf". There is no "heavy inf" unit type in the game. The only "heavy" thing is heavy artillery, which can be used to soften up an enemy from afar, especially useful for large stacks in cities, but those units cannot take out anything by themselves, but getting that tech takes a moment, so I doubt that is what you are talking about. However, you also talk about taking "Planned" (a D2 tech) for your economy, which is a few techs down the line. Around that point, I very much doubt either you or the Gaians will still field power 2 guns and armor, power 4 guns (Particle) against power 3 (Plasma) seems more likely, which by itself already slightly benefits the attacker, especially in cities without perim. defense).
The only other thing the Gaians will have at the beginning of the game will be a zoo of captured mind worms. Combat with those follows special rules that on land always benefit the attacker (by setting the power level of the attacker to 3, of the defender to 2, no matter the gun or armor). This should be slightly offset by your units hgher morale, but as someone who would put the Gaians in their Top 3 of factions I know how destructive that can be in the beginning. However, they can be countered pretty well by giving your defenders the "Hypnotic trance" inprovement, which I am not sure if the automatic unit builder will add to your blueprints automatically, but think personally is a better investment than the comm jammer that I am pretty sure it will add to your defenders (which is great if you are about to be mass rushed by speeders, but mindworms or infantry could not care less about).
The only other thing I can think of is if you play with the expansion there is a chance that they might have found a powerful unit randomly (a battle ogre, has better values than what you likely could build yourself at that point but cannot be repaired). While even one of those can take more than one unit to take down, it should go down eventually and not return.

In general never try to hold a city against infantry without a perimeter defense. From particle up defending without massive bonuses is hardly viable.

Corazon Santiago is my personal favorite and here's some tip for your next game :

-research must immediately aim to weapon techs, to make full profit of your starting vehicle chassis.
-explore a lot with your vehicles, you're the fastest explorer if you quickly produce more speeders.
-Try to save all your speeders for your first offensive war. Laser is not comfortable, you should mass upgrade them at particle, then squash the 'best neighbour'.(typically aim at those civs who do better than you developping techs, but cities are always good to have early for Santiago to compensate for economical penalties.)
-I usually aim for green, as you will profit a lot from researching new chassis, and green gov is in the explore branch (gives you mndworms to complete your arsenal). Planned can't be completed by wealth in your case and as such is quite sub-par. Don't compensate your penalty in industry, expand on your military strength.
-In order for techs : weapons/explore/knowledge><build. The two last are in order, but you always have to go build a bit for resource harvest. It's a bit tricky on this for you, you need some knowledge quickly for weapon research.

Attack Always, attack often : you're here to reunite them in all security, no time to waste peacemongering.

Alpha Centauri is an AI 'base rush' game, the early game 'IS' the game, once you get to mid game the AI factions just 'stop'.... thats the best word to describe it, they just 'stop' .... their technology and expansion suddenly stagnate and then they will sit and wait for you to eventually mop them up.
I really Hate that about this game, but the Gaians is the one faction that can sometimes manage to keep growing even into the mid game!

Anyway, because its a base rush game, the AI will come at you hard early on and bust you up, then you put the difficulty down, and then find yourself twiddling your thumbs by mid game with zero challenge.

The answer i find, is to put the difficulty high, but then always play on your own island so you dont get wiped out by the early base rush.

(Edit: or you can play Gaian, and base rush the AI with captured mindworms! lol)

In addition to the Industry factor, Green is -2 Growth, Planned is +2 Growth. Only the Morgans, with -3 Planet, have an aspect of their social engineering that is more offensive to her.

Make several units with Speeder, best weapon and Heavy Artillery. Mass these to the point where her forces are coming. You should be able to weaken her units with constant barrages to soften them up for your units to finish them off. Or they will attack while weak and save you the trouble of wiping them out. Good luck!