IMO, it's not that espionage is overpowered per se', it's that the computer is terrible with it. Granted, running the GW early in the game would make espionage extremely painful to counter with the slider (almost impossible without damaging base tech badly). However, for anybody else merely running counter espionage and directing points at the person obviously (and it usually is) planting spies everywhere greatly increases both the chance of spies being captured and the cost of missions. If you look at my stats, it seems I lost alot of them anyway

. For the entire game after my first war, I had a city making them. For about half of my warfare time, I had two.
That's a considerable investment in hammers, I admit (just look at the end game stats...I made 80+ spies and had 22 left! I could have used them slightly more efficiently, but nor much). However, since I ran the GW it made sense. Spies are cheaper than other military, usable all game, and WW free to lose. There's also the hammer costs associated with warring, and alot of that comes from AI's producing units DURING the war, which of course smearing through lowers. Faster wars tend to lead to less WW bloodshed too

. However, pure mounted strategies do incur somewhat higher losses with tech parity, even with spies, so you either need a soft target, a LOT of troops, or a tech lead. This wasn't an issue for me most of this game because I leaned on the UU quite heavily, and that advantage + financial carried me through the entire game (with the requisite focus on the mounted troop techs for a lead in them of course!)
It's hard to say whether traditional stacks or heavy-handed speed wars with spies are better, IMO it's situational. If one has a powerful mounted UU though, I'd not rule out making tons of it and using spies...
Edit: I actually had enough EP to steal techs AND incite revolts, although the only way to do that with a 0% slider is via the great wall. Madscientist has showcased its use and settled GS's with SY and EP buildings quite heavily in 2 o his recent games, prompting me to consider such a strategy in a heavy war game

.