Hey, Invictus! We do have openings and would welcome another player.
By declining joining the federation, you would not be under their protection. It doesn't mean that you would be free to steal etc but more that you would not be protected against theives. The federation sets standard punishment for stealing etc. The Council will investigate a possible theft when requested by a member state. If an unicorporated land is caught stealing then it would be up to the victim to determine the course of punishment. They could choose to enact their revenge without abiding by the limits set forth by law, or simply to enforce the set punishment.
Likewise, a member state could steal from you and the Council *may* decide to not investigate. But if they were proven guilty, then the punishment may *or may not* be limited by the laws. (We really haven't thought it out, yet.)
As you should know, rules for this type of gameplay aren't already laid out and we're still experimenting to see what works. Personally (and neo agrees) that's half the enjoyment of it. Clearly there's always going to be an element of "Gentleman's honor", but we are certainly open to having "Rules for Lawlessness" as well! Why else would there be the possibility of wars?
We definitely distinguish between in-game lawlessness and outright cheating, either in-game or out-of-game. Examples of outright cheating would be using an infinite stone generator or hacking the project file. If you go through the earlier posts here, you might realize that the 'Council' has the power and will to completely obliterate a player's efforts, up to and beyond respawning an entire city. This would only be done for the most aggregious outright cheating.