Question: given my current status - and so far other than isolation frustration - I feel very comfortable with my enormous military that has crushed every CIV landing (including the turncoat English) on my island. Is there anyway to reverse the situation and develop real alliances or should I finish this game with the mindset that I will need to dominate militarily until the end?? I'm willing to test ideas.
You don't have to play the game that way. But keep in mind that:
#1 Aggressive conquest, if done well, has a very large return of investment, it can become addicting, once you get the hang of it.
#2 At low levels, the AI is at such a disadvantage, that its faster to do everything yourself. They can't help you with research because you can out-research all of them single handedly. You can develop land faster than they do, and you can easily take on all of them at once by yourself. Using any kind of alliance becomes pretty pointless that way.
At higher levels, it is more meaningful to take the diplomatic landscape into account. Still, you shouldn't expect the AI to help you with defeating a common enemy directly. (though they sometimes do help that way, they often don't) Compare it with RL in this way: The US forms a broad alliance against a small nation, but it does 90% of the fighting, their allies help here and there or send symbolic amounts of troops. Still, they form the broad alliance, because they a re better off with it than without.
Question 2: My catapults that I have protecting my harbors no longer seem to have any impact when firing on CIV ships. Early on they would cause hit damage and assist my galleys prior to attack, but the last 6-8 shots have all said "bombardment failed." Is this just chance or has the defense shielding of these CIV caravels somehow changed with time or a technology I can't seem to identify.
Both: Every instance of combat is chance based, but there is a probability ratio involved. You'll hit less often if the target unit has more defense. and you'll hit more often if your unit has a higher bombard value.
That said, 6 to 8 shots is an extremely small sample. If you are playing at SID level or Deity, and you are bombarding 500 units in one turn, you can easily get streaks of 50 misses followed by streaks of 50 hits.
I am now building costal fortresses and cannons - is this a good use of resources?
It depends, do you need more bombard units or do you have enough for now? I can't say without knowing exact situation you are in.
I'll tell you this though: The coastal fortress is about as close as you can get to the most useless structure in the game. I think its save to say its never useful. With everything else "it depends," but I make an exception for the coastal fortress.
Also: You can upgrade your catapults to canons. Maybe you should consider lowering your SCI slider for a few turns, collect some gold, and upgrade them, instead of replacing them by building new ones?