I created this mod after playing X4 with SWI to mid-game where I had my own fleets lead by capital ships. Even with the best friendly fire mods, it was still impossible to have combined fleet engagements assisting allied NPC factions without triggering a cascade that turned a +30 faction to hostile. This happens because the base game has threshold values for how many times each ship size can be attacked before they respond to that attack (for S size ships, this threshold is notably: one attack). When thresholds are met, those ships then request aid from the rest of their fleet, and all of a sudden your game is ruined. Ships in the SWI mod have many weapons, and therefore trigger hostile responses far easier than what would happen in the base game. This mod increases those thresholds by a factor of 2-5x depending on ship size. Using this mod, I have not had any allied ships turn hostile after several fleet engagements.

This approach comes at the friendly fire issue with more of a hammer than a scalpel. If activated in the 'early game', it will feel immersion breaking - neutral small and medium ships you shoot at won't react at all until you've nearly destroyed them. You will still get relations penalties for attacking when the NPC does eventually respond to your attack, and/or for destroying NPC ships. In general, I recommend activating this mod mid-game, after you have a ship with a number of turrets, and you have pretty much set in stone who your allies and enemies are.

I made this mod for the 5.10 version of X4, and have not tested it in newer builds, though unless Egosoft changes the logic rather aggressively it should still work. Anyone has my permission to use/modify/improve/integrate this into other work.