So what's the best/correct use of privateers? I don't bother with them I must say but maybe there's a cool use for them.
Given that they can enslave you can use them to attack ships that have been bombarded down to a few Hitpoints. That will be much more effecient than using frigates for the actual fighting.
Also you can use privateers to sink ships from nations you are not at war with in the crucial time of colonizing all those island that become available with magnetism. Sinking transport ships of your competion in settling those island gives you a nice edge.
Also they might be use to block trade routes of your undeclared enemies, but due to their low defence value those privateers could be removed easily.