Actually, it does. Theatre HQs will request units based on estimations of the enemy's strength, and from what I've gathered, the military AI is more hesitant to attack provinces that it has low intel on. The AI is not omniscient; it sees only as far as it should be able to, and it appears to know that. Of course, since we are not given any insight into how the military AI works in the first place, I cannot verify any of my claims with actual proof. :happy:
However, the Japanese AI definitely takes intelligence into consideration when it observes the Soviet-Manchurian border. If the border looks forsaken, and the AI has sufficient intel on the border provinces, it will declare war. See the "JAP.lua" file in the "scripts\countries" folder.
I've also heard that having more encryption/decryption than the enemy gives you a slight edge in combat, but if so, the difference must be barely noticeable.