The problem is that if you have a minority of a foreign race on a planet, a majority being your own race, and you then use the enslave/exterminate policies on the foreigners, this causes the entire populace to revolt against you, the colony possibly going independent (due to militia takeover). This happens due to the large happiness penalty the entire colony receives from the enslavement/extermination. Obviously, this is wrong: Because I start to exterminate the 30M Teekans living on a world, my 500M Boskaras shouldn't be upset, much less revolt - they in fact possibly applaud the extermination policy.
It should only be when a majority of the populace of a planet is being mistreated that there is happiness penalty - the penalty should simply scale based on affected population size, so that exterminating a small minority of a foreign race doesn't produce some -10 - -30 (or whatever) happiness penalty, but just a -1 - -3 one.
Please fix this so we can do some meaningful, cruel mistreatment after our warmongering!