Perhaps this can already be done and I don't realize it because I haven't been pursuing my faction quests yet, but it would be cool if you could "conquer" a system and the faction colored highlight would grow to encompass the conquered system.
Not that it would make that much difference but could be fun and add a bit of flavor to late game play.
It would definitely be cool, but at the moment we are not ready for such a major improvements. Maybe later.
Just to clarify. It IS possible to do with mods.
But it is not a part of the core game because technically factions are not really fighting each other, they just have their territories where they project their power, but they have no ambitions to conquer other parts of the Far Colonies.