I like the concept. There’s a dependency on being able to split/merge/re-route fleets that we should do anyway, but the idea of merging forces with friendly empires sounds incredible.
Combine this with stationing fleets to hover in systems, and you have some very interesting potential for alliance wars fought entirely in the air.
I do agree about the concern about domination. One way to curb this would be to apply a battle penalty to units who are being directed by an external party. That factor could be adjusted to find the balance where this feature can be powerful in the right circumstances, but not always economical.
Going on a tangent, we could also add risk for using this by introducing a concept of enemy capture, where letting a friendly empire use your units puts them at risk of being conquered (not killed) by the enemy, and joining their fleet/empire. This could even be possible in all battles, but at much higher risk for fleets “on loan”.