everyone here says the game is too easy anyway.
Objection.
Start the game as count of Teluch and try to get peace with emir of edessa when he strikes.
Basically, if you pick HRE, yes, everything but mongols feels beneath you, if you take duchy, you've hard time conquering anything that is part of another Kingdom as the king will come and stomp you with great amount of troops, while your own king will steal your sieges not caring about your demesne defense (punishing your stupid behaviour this way).
If you take county the best bet is get a liege if you haven't one and try to inherit some duchy first, otherwise your future seems very endangered.
I would say that AI's toughness changes approximately like this:
AI 2 times more troops = 2^2 = 4 times harder to hit
AI 2 times less troops = 1/2^2 = 4 times easier to hit
Use Very Hard, Furios if you feel like God.
I wouldn't like no-money-for peace feature get implemented.
It would take away from flexibility of the game.
Good example - Byzantium stands no chance against Seljuks in 1066, even if they raise all their troops.
As an intelligent human player I am able to buy off with some gold, thus preventing a disaster. If Im not able to, I will probably never play Byzantium again, at least not on VH/F - It's too damn hard (and you need to do lots of boring micromanagement) to fight Seljuks off on this level with all those civil wars and other instabilities.
In fact, the sums which pull a peace through are sometimes too small for the forces involved and other factors around them.