Originally Posted by Captain Tom Coughlin
I've always figured that there must have been some kind of balance brought about by that treaty. Perhaps the advantage is in production capability. The Federation being made up of so many member worlds may be able to produce say 5 ships to every one Romulan one. So the Romulan ship may in battle be able to take out multiple ships in battle due to it's advantage with the cloaking device, but that advantage is counterbalanced by the Federation's production ability. Treaties without balance of this type tend not to last long, unless one side is so much stronger than the other that it can simply impose it's will.
Perhaps the Federation just wanted peace at any price and perhaps giving up cloaking technology wasn't a high price as the UFP doesn't seem to know much about it? On the other hand, it seems pretty foolish to give up such a technology in the long-run.
About the balance of power, in a two player game it might be indeed a simple matter of numbers. Kinda like in the Dominion War, they were simply faster at ship and soldier production. But there are also Klingons, so matters become a bit more complicated due to the potential of alliances in a three-player game.
Furthermore every side plays differently. Kevin mentioned the Rom(ul)an self-sacrifice and Klingons don't mind to die in battle either whereas the Federation is fairly defensive.
And last but not least, in war neither Klingons nor Romulans dare to go all in as they have other enemies on the far side of their borders. So even if these two powers are far stronger than the Federation, a balance of power can exist and endure.
But these militaric issues have never been portrayed too well in Trek, that the Klingons could wage war against the Romulan Star Empire and the Federation in Yesterday's Enterprise seemed pretty unlikely to me. On the other hand, it is easy to piss off a Klingon, especially one who wants to get fast to Stovokor.