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The idea of "reputations" is a great one, however the system they're using to impliment them is junk.
Reputations should fluctuate with each mission you do based on the faction you're most loyal to. For instance, if you do a mission for Starfleet Command to blow up a Romulan base, then you should (by default) gain faction with the Federation, Section 31, Starfleet Command, Federation council, ect. You should also lose ALOT of standing with the Romulan Empire, the Tal'Shiar, Romulan High Command and any other Romulan assets, though you could gain faction with some rogue elements like "Romulan dissidents".
The more "points" you gain for each faction, the more lucrative and special the missions are. This is reflected by the fact that you're earning the trust of the entities you're working for. Higher standing, opens up better missions and contacts. Double crossing your faction earns you some serious backlash.
This concept of performing missions on the Romulan colony to gain so called "faction points" would be fine, except that number never decreases as a result of the number of preciously rare Romulan Warbirds you've blown out of the sky. See what I'm getting at? The system they describe is just another point counter (designed to unlock bonuses as points get higher) and not an actual measurement of "reputation" based upon which faction you serve.
Yes, this means that some people "Freelancers" could play both sides of the war effort. Some people could even conceivably "defect" from one side to another by earning a high enough reputation with the opposing faction (to the point where military missions are offered) and annoying their original faction (to the point that missions are no longer offered.)