1) Yes, the AI most certainly will build Criminal Networks. However, I've never seen them successfully expand their actual planet ownership beyond that. This is because the AI is not very smart.
As for survivability, Smuggler AI has the longest odds of survival. This is because they're the least offensive and are better at making friends than enemies. Smugglers, in their own way, actually help Empires and they're the most likely to keep Truces with other Pirates.
Raiders have the worst survival rates, as they basically suck in every way, their bonuses are completely contradictory to what they actually do and their strategy is basically hopeless from the get-go.
Mercenaries are also fairly weak, though it won't look like it at first. Yes, they'll have a lot of warships and yeah they'll blow up a lot of things, and this will annoy you and make them seem like a bigger threat than they really are. The problem is that they suck at support structure. Their economy won't be the least bit sustainable and in the long run they will become completely overshadowed by everyone else.
The real main reason why AI Pirates are so horrible is that they don't do research. Ever. It's like it's been hardcoded out of them. Which means that they are all basically doomed from the moment you hit Start Game.
2) Now a Player controlled pirate... that's a whole different story! Pirate play is really only different than Empire play in a few areas, but those areas make a world of difference.
2a) You don't start with a homeworld. This is a problem, as you also start off with negative income. From the first second of the game you've got to have a plan and you need to get moving, because the clock is working against you. Until you manage to actually get a few planetary bases built you will only bleed money and eventually become unsustainable at all - and this can all happen in just a couple of years.
2b) Instead, you bleed money off other planets through Influence, which let's you build pirate bases on planets, which in turn lets you bleed even more money off them. With a full base you'll be skimming 30% of their gross GDP into your pocket. All of this becomes completely meaningless, of course, once you actually build your Criminal Network and make the leap into legitimate galactic power.
2c) Once you make that transition the entire game quickly turns into Easy Mode. Note that you're still going to suffer from a horrible, even more nerfed version of Corporate Nationalism (all the extra expenses with none of the extra income, woohoo!), but that's okay because you've go two advantages over the rest of those do-gooders out there and these are...
2d) You are forever at war with everyone. Now that may seem like a bad thing but it isn't. You're reputation sucks, it will always suck, and because of this you'll never have to worry about it. So go ahead and rain nukes on enemy planets with impunity. Launch unprovoked sneak attacks on anyone and everyone you want, whenever you want. Enjoy never bothering look to even open the diplomacy screen because to you the galaxy is nothing more than prey waiting to be hunted down and consumed at your leisure. And that's exactly what you're going to be doing because...
2e) You have no real research cap. You know that feeling of frustration you go playing Empire when you built your first research base, only to discover that because your Empire was only so big that it was capping your research down to a painful, plodding pace that made you wonder if your hair would fall out before you gained the next level? Yeah, say goodbye to that. Your pirate bases multiply your research potential so much that it's quite likely you'll forget that the ceiling even exists, because you'll never see it again. Build a giant research base with 30,000RP in every department? Sure, why not? Max every tech in the game in under a decade and then watch as your five ship group methodically moves from world to world, swatting aside hundred ship fleets and starbase defense complexes aside like so many gnats. Sit back and smirk as Empire pitfully continue fighting each other as you steamroller your way across everyone with equal impunity.
So in conclusion, pirate play is a lot of fun. It's basically a very, very high difficulty level at first - the first ten years or so is when you're most likely to lose, in fact. But once you've make it past the Criminal Network hurdle it's all gravy from there. Once that popup appears your victory is pretty much inevitable unless you do something really stupid.