Ok, so I THINK this same setting was in SE4 (ok, yes it was) and I noticed it just now in the settings.txt for SEV as well. Just wondering what it actually did, never figured it out myself.
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"They are a dying people. We should let them pass."
"Who, the Narn or the Centauri?"
"Yes."
I'm pretty sure this handles what happens when you glass a planet (destroy everything). This should be how much the resource modifiers of the planet are reduced by this action. A 100/50/75 planet that gets glassed when this setting is at 10 would become a 90/40/65 planet instead.