Yeah, the way pirates are implemented right now, it definitely won't work but this can also be changed. Gameplay-wise pirates seem to serve the purpose of making sure you always have a high-tech enemy. If they were made into the opposite of Empire where allying one of them guarantees that the other side hates and starts raiding you, that would serve the purpose pretty well IMO. It can also be made into two fun non-symmetrical choices where Empire is honor, order and slow grind of doing quests to advance in rank; and pirates would be more of anarchy and yolo advancement (sell a bunch of slaves, buy a bunch of psylinks on black market, upgrade everyone to max level, get punched back by Imperials in power armor, raid their caravan, run away from reinforcements arriving in shuttles, etc.).
Rebels would work well too, my only concern that this adds a new "entity" and I don't know if this will end up as a soup of random factions with lore and flavor getting lost. While pirates are already there and can be repurposed into rebels (rebelling against law). And we also have mechs - we don't know if it's just this planet or it's normal that murderous mechs are constantly raining down from the sky. And this could also be repurposed by alluding that they have something to do with the fall of this planet or even the fall of the Empire. And remember that the whole psy thing has something to do with archotechs so it's a chance to expand on this further and give them a reason to hunt Empire, where they ally with you to simply divide and conquer, in the meantime tempting you with psylinks and archotech body parts.
Rebels would work well too, my only concern that this adds a new "entity" and I don't know if this will end up as a soup of random factions with lore and flavor getting lost. While pirates are already there and can be repurposed into rebels (rebelling against law). And we also have mechs - we don't know if it's just this planet or it's normal that murderous mechs are constantly raining down from the sky. And this could also be repurposed by alluding that they have something to do with the fall of this planet or even the fall of the Empire. And remember that the whole psy thing has something to do with archotechs so it's a chance to expand on this further and give them a reason to hunt Empire, where they ally with you to simply divide and conquer, in the meantime tempting you with psylinks and archotech body parts.