1) I play it on a 13" screen - the only issue I have is a bit of cut off text in the planet info box when there's a lot of info to display there, but 98% of the time it's info I don't miss, and the other 2% I just use the new Shadows "expand window" thing. And I've never had trouble reading the actual font there or an any other menu - I bought the game when Shadows was released, so I can't tell you how much it's improved, but I see it as a non-issue.
2) Confession: I've never played either of those games. The crucial thing to understand about the AI in Distant Worlds is that it has very little intrinsic interest in :killing: you. It wants to reach the victory conditions set at the start of the game. Though it varies some from race to race, the AI prefers to expand non-violently when possible - and it's probably a good thing, as prolonged fighting would set it behind the curve of other empires. But this gives the player a lot of time and room to maneuver, and unless another empire gets a cascading, runaway-type victory or a powerful empire decides it wants you dead, you can usually reach a turning point where from then on out you are bound to win. IMO, though, the game is fun far beyond that point, as even with a lead over the other empires there are a LOT of challenges left to overcome to reach victory. Learn how to customize the victory settings and you can set it to win just as things start to get tedious. Also, I like upping the aggression setting - on Chaos, the AI is VERY war-happy in the classic age, making the early game a big challenge, and while in the Age of Shadows the pirates keep the empires working together at the start, the politics get very interesting later on.
3) Is the game fun? If you don't mind games lasting many hours and enjoy the huge number of, well, numbers in the game, then YES. Does it get repetitive? Well, sorta. I play on all manual settings; I spend a lot of time queuing constructors, redesigning ships with a new component, retasking spies, assigning new missions to scouts, over and over again. But I still enjoy the game because the small-scale repetition is part of a larger strategic goal that is extremely nuanced as a result of all the different elements included in the game. I've never played the same initial conditions twice, in fact I doubt I've explored even 5% of the settings I'd be interested in, and yet I bet I could play the same setup many times before the strategic layer got noticeably repetitive.