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Whilst its definitely possible to have a Domination win, being aggressive in a war usually leads to a mess at home, resulting in the economic shambles you encountered.
You could, however, always pick up Democratized Quartering in the Might tree for a "boost" to economy, allowing you to keep an active military out and about, as well as one sitting at home for the trait bonuses. Even then it would probably be wise to make a beeline for the capital cities, rather than capturing the entire enemy civilization.
As for Rising Tide... I'm definitely not the man to talk to about that. =P
Certainly an advanced players recomended faction though because while there is power there there are a lot of restraints in place that you need to understand and know the counterplay for.
If there was time I'd like to play through again using what I learned in this play through, (stay small and organised, maybe don't concentrate on might virtue quite as much, make sure i'm heading for a victory by midgame and keep a better watch on others doing the same) but I don't have that time now before rising tide comes out (I wonder how that will affect existing sponsor mods?)