My preference is to use the Space Master: Privateers (SMP) for the completeness. However, I prefer the "Imperiums" setting of the SM2 books.
MY OPINION ONLY: Space Master: Privateers was a publication of a single GM's sci-fi setting while also trying to re-create Space Master.
I have always preferred a neutral setting like the "Imperium" setting in the original Space Master books. However, even that could have been a single GM's sci-fi setting. But it did not seem such. It seemed more Star Trekish and/or Star Warish with "humans" still trying to create an empire for themselves while also struggling with its own internal conflicts of the "Houses" while also having the external threats of the Snee and others.
In my SM2 campaign, there was the Terran Star Empire, Urgon Hegemony of Federations, Inurian Confederacy of Emirates, Snekra Administration Dynasty, Khryshyn Concordium, Nebulonic Imperial Security Force, and Enigman Invaders. Each of these had their own spatial influences while also trying to expand outwards, and conquer the other empires. This sort of setting can lead to quite a bit of conflict and spatial combat with ships.
However, if you prefer extreme subterfuge, then use the SMP setting.
Otherwise, use both the SM2 and SMP settings to create something in between.
rmfr