[Alneyan]

I second Geo's proposal for the reasons given below. (It isn't as if I could add anything)

I would consider a loss as having no more fighting potential. That is, if a player has no planet left but if he has troop transports/colony ships she should be considered as still being (barely) alive. However, lurking a single fighter in a red nebulae does not qualify as having any sort of military power. And likewise, parking a few warships in the same nebulae should not allow a player to remain alive when the game is obviously lost. (Granted, the case of a player being almost crushed but still able to gain a colony or two is a bit extreme and is unlikely to occur, unless you do want to fight to the bitter end)