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While I like the idea of faction v faction conflict and the headquaters attack sounds good there are a few issues I have.
1. Can more than one faction attack a single faction, e.g. can 2 level 10 factions attack a level 1. No, an HQ can only be locked by one faction at a time. While a HQ is being targeted, it is removed from the general HQ's that are available to be potential scanned.
2. Would low level factions be protected from constant attack, e.g. lower reward for winning, minimum level needed to be attacked. This quote suggests a level 10 could repeatedly attack a level 1. Since there are so many hundreds of low level factions, the chances of locking the same one more than once a year or so is extremely low. But yes, it could happen. And remember, low level factions aren't necessarily less active. New factions generally have the highest playing rate. The inactive, low level factions would basically be a lucky treat if they get locked.

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A possible solution would be to add the enemy faction level into the reward formula. Possible. I will see if I can work that in easily.

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3. Will a defeated faction suffer any permanent losses, e.g. need to re buy protective plates or other bonuses? They could have some suitably small punishment, such as one day of lost credit production if they have extractors built. But no, nothing permanent.
4. Will there be measures in place to prevent exploitation by factions to get credit donations, similar to what happened with battle tokens when flags came out; where factions recruit people to donate then immediately remove them afterwards. I could see how that might be an issue. Perhaps a rule that any faction member who is currently participating in an HQ attack cannot be removed from the faction until the HQ lock expires? That would prevent exploiting players to do damage, then kicking them before the rewards are claimed.
These issues concern me as it may lead to the cuurent factions dominating this system and new ones not being able to ever compete with them. I thank you for your concerns, they are well placed. :)

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And remember, low level factions aren't necessarily less active. New factions generally have the highest playing rate.

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I could see how that might be an issue. Perhaps a rule that any faction member who is currently participating in an HQ attack cannot be removed from the faction until the HQ lock expires? That would prevent exploiting players to do damage, then kicking them before the rewards are claimed.

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Faction Leaders, and possibly officers.

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That would suffice for one form of exploitation but since you said officers could donate credits to a faction's fund/buy new upgrades, see quote below, what is to stop exploitation there; e.g. promote to officer, have them buy something expensive, then kick them? Yet I do support the idea of officers and members being able to help buy this stuff, shouldn't all fall on the faction founder with such high costs.

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I think an architect, such as the man in entrance of fortune city who sells houses, shouuld be placed in the hq. All members of a faction can go to it and see all possible upgrades availible to the faction. From there they can contribute credits until they reach the required amount needed. Ex) if i had 12k credits and a generator cost 50k, i could donate 12k now, and a week later donate more, and so on, so it is constant.and other members can help donate to the same thing