No, it is not a debate, the Encyclopedia tells us that the Empire is getting trashed right now, by themselves just as much as by the Republic, whom by the way, have the two most powerful Jedi of the era alongside Satele Shan going for them, on top of that you have Havoc Squad and IIRC an entire smuggling fleet stealing tons of supplies every day from the Imps, the Empire is not looking very good atm.
OK here goes.
Remember the timeline stuff? Remember how much the Empire was dominating? I don't think that a few victories for the Republic can counter all that.
I'd bet that the Empire has more raw numbers, more supplies, and stuff.
Yes the Empire ain't doing so great right now, but they're just experiencing a recession. They'll be back (although I'm totally rooting for the good guys).
As for the encyclopedia, I'm sure you're right. But did it say that the Republic was actually doing better and winning the war? Or did it just say that the Sith weren't doing so hot at the moment?