The AI does NOT cheat to the point of making it weak in some areas. I heartily applaud Paradox's decision in this.
1) Alliances: If an alliance enters a war, it will be extended for 10 years. Happens for humans too.
2) Ships lasting centruies: Ok, this is a bug...
3) The peace offers: I think it was Hartmann who pointed out that originally in the Beta stage the the AI had to take loans to pay and reperations. But there was a way to exploit this: Conquer any 1-province nation, ask for 800D, they have to accept. They take loans, you take your money, they go bankrupt (and are able to take loans again.) Rinse and repeat. So there was an exception to this rule for AI players. Sometimes, AI will ask for peace demanding all the money you have, be it 250D or 10D.
4) Monopolies: Some countries start with level 3 or grater tech levels. (Venice and Geneoa springs to mind, but there are other minors.) For small minors, the amount of money that must be paid to advance in tech levels are smaller too. If Georgia was lucky in receiving random events, they could have easily built up their trade to level 6.
5) The land armies of the AI do suffer from attrition. Horribly. This is one of those points which I think the AI should be given a 'cheat', because it might be very hard to program an AI that fights well and suffers from minimal possible attrition at the same time. But at this point, I do not really fear the AI armies, because I know they will all kill themselves too managable levels if I wait long enough.
-alt.