OK. So, it's not exactly extortion. It's more like Capitalism. Basically, I've focused much of my resources in the second phase (phase after initial colonization) on research. I then use the technologies as 'products' that I sell to the other races (both major and minor) for as much BC for as many months as possible. When done right (and when neutral, it seems), you can quickly (relatively) create a galaxy that is economically burdened (aka, in debt to you). This impedes the growth in all areas of the alien civilizations and creates a rather large control gap. This also seems to cause much strife between the other races as they compete for resources. As you have been trading with all the races, your alignment with them is usually somewhat favorable and they seem less likely (but not entirely) to attack Terrans.
Trade Goods play an important part and I use a good deal of leasing (countered by the amount of revenue generated from the selling of tech/tgs) to purchase new trade goods. I don't sell the trade goods too frequently to the major races, only the minor as they tend to be less 'aggressive'.
A couple things to note about this approach:
01) NEVER neglect your military. The sole reason many of the races agree to the terms of the sale is that you pose a decent military threat...even if a bit weaker...just don't be the weakest!
02) Once many of the major races have been 'removed' from the scene you'll need to develop your own tricks to complete the game...this seems to be a good approach (and a blast) for me to get to the point where I'm head to head with the lucky survivors!
03) TRADE! This is NOT an alternative to trade routes...this is a way to generate additional revenue and boost production levels!
i've done a similar method and i've also learned that when near to all of the other races are in debt they will more easily accept you asking them to attack another race. It helps to smooth things out a bit when they do all the killing for you; you know, just in order to get rid of the dissedent races that won't respect you