I *think* it works like this:
. If it can't find any within range, it instead seaches for the faction with the lowest influence. Your faction expands into that system, and the faction with the lowest influence is moved into the system you are expanding from.
So having a very high influence in a system can actually start to attract expansions, because the other factions will have such low influence.
This is actually the first time I have seen a reasoning for expansion into systems with more than 4 factions present, and it makes lots of sense too. I'm hoping for a future expansion into a system with 6 in it already, and will be looking to see of this works as you describe.