Well, I think I will drop it to just below Challenging, I can do challenging if I don't have to worry a lot about my economy, which would be a mixed research-industry game. I will drop it down to Normal I think, 4 opponents on Normal shouldn't be overly hard. Stupid Drengin wont be able to team up so well against me this time w/ the Torren and Kroza. They are really freaking militaristic though, so they lag way behind sometimes in researches (other then military tech). If I can incite a good war between the three of them, then I really shouldn't have too much trouble staying alive.
Have you considered using the AI super abilities to your advantage? Setup a game with one or more evil AI (e.g., Drengin, Korath, Korx, Yor) and the Altarians with at least one other good AI (e.g., Drath, Iconians, Torian). The evil and good AIs naturally dislike each other so it will be easy to bribe the strongest evil AI to declare war on the Altarians. Since the Altarians are the super organizer, all the good aligned players are forced to come to their aid (including you if you are leaning or aligned good so make sure you are leaning or aligned evil or neutral).
If you are having trouble winning on level challenging then you are likely doing a poor job of building up your infrastructure. Be sure to research the techs that provide bonuses to social, military, research, economic, and morale (e.g., get planetary improvements quickly, in fact I make it one of my starting techs in custom races). In the early game I keep my taxes low so my morale is 100% for a doubling of my population growth rate and save most of the starting 5000BC to support my deficit spending until my stock exchanges come on-line. Only after you have a solid infrastructure:
(1) healthy economic surplus to pay the cost of building and maintaining your military fleet
(2) robust research to quickly research warp (for the speed bonus), weapons, larger hulls, minitrization, and possibly defense
(3) robust production to quickly build your combat ships
should you consider going to war.
Keep the AIs off your back while your prepare for war by keeping your diplomacy high, setup trade, and get them fighting each other in exchange for economic and research treaties. If you align evil be sure to build the Mind Control Center for a 100% economic bonus and the A. Slave Center for a 50% military production bonus, plus evil can research a beam weapon with attack 12 after researching phasors 1 which only have attack 3!
I hope this helps!