Repairs are instant. We experimented with persistant damage, maintainance costs and such, but found that it added nothing but confusion and frustration for players. The build times were greatly sped up for the demo - for example some build times that are normally 2 minutes were set to 20 seconds in the demo (those of you who mod the demo should be able to see the real build times and costs in the XML).
There are many things that balance out the instant repair: the ease of destruction of ships, build times and cost, unit and money caps on planets, the leveling cost of space stations, construction prerequisites, retreat attrition damage, etc. We didn't just make the instant repair decision lightly; many factors went into the decision.
As to the "mass fleet of doom" tactic, it's not likely that this will work in a prolonged campaign, at least until you get to end-game situations (and by then it is acceptable). To do this you would likely have to strip most of your planets of defenses, which would leave you open to attack.
I would suggest that you try the system over a lengthy campaign once the game comes out. I personally feel that it works pretty well.