Large stacks of fighters are not intended to be the only thing that matters in MoO. The BHG is just the most blatant weapon system to attempt to trump what is, against default weapons, the absolute best way to build your fleet - to strap your best weapon system onto a fighter and build a bazillion of them.
I wonder...one huge battleship has space for more weapons than an equivalent BC's worth of fighters. So at least in the beginning of the game, when one battleship can last long enough to either destroy the enemy or escape after some rounds, I'd say a huge ship is preferable.
Are you sure about this? Engines take up a huge amount of space IIRC on larger hulls, smaller hulls look less efficient but end up winning out just because they spend less space on engines. I may be confusing things. I know the winning strategy every time I played MoO in the past was pretty much what I said - build a bazillion fighters and swarm the enemy under.
The advantages of larger ships are resilience and versatility. You can fit oddball systems like your repulsor on a battleship, as well as heavy shields. But for simply getting the firepower into space and blowing things up, fighters have always been the thing. Among other things, because you can actually build them and have them finished before you've already lost the war.
Regardless, everything is MoO is a matter of adapting to available tech. What was awesome one or two tech levels ago can be worthless now, not merely because of simple obsolescence but also because some technologies completely change the game. The Black Hole Generator is one of them. I'm pretty sure it's intentional, although the effect may be exaggerated beyond what the designers actually intended.
Edit: Note that I'm going by memory - it has been a very long time since I fired MoO1 up, so it's possible I am remembering some details wrong. I'm pretty sure of my position on the value of fighters vs. larger ships, though - when dealing with standard weapons that are not designed to beat fighters, fighters reign supreme.