The neutral gray AI needs some tweaking.

[Astasia]

My past few games I've taken out a powerful opponent by going right for his capitol, then watched all his stuff turn neutral and proceed to take over the rest of the map turning it into one big gray empire that can't be reasoned with and attacks everyone on all sides relentlessly. It's ability to apparently assemble multiple attack groups puts it way above the other AI's from what I can see, and I wouldn't mind other AI's behaving like that, but perhaps it can be tweaked so the gray AI doesn't attack towns and just defends what it has and maybe picks off lone wanderers that come too close. Though honestly on impossible right now it's the best opponent I've had.

 

[VRBones]

Interesting. In my current game I'm attempting a one city challenge and am using the neutral cities for XP farming. They do not attack and even fail to produce troops (as opposed to monster dens). I would have said the same about cut-off AI cities from my recent dealings with them, although I usually wipe them out in short order giving no time to analyse their behaviour.

In fact, the bast tactical AI I've seen so far had been glimpses of a constructed attack (with unit preservation for damaged units) when playing the first game on normal. Since then it's seemed to be stuck in turtle mode when playing on impossible.

There seems to be signs pointing to the AI being hamstrung by conflicting priorities. If that's the case, then an AI patch could just be a couple of tweaks away.

 

[Astasia]

The starting neutral cities aren't a threat, they are spread out, can't expand, and never combine forces. Once one of the powerful empires fall and they get their hands on all those units, they just seem better able to utilize them. They still don't build anything AFAIK, so it's not a lasting reign of terror, but it's usually more than enough to wipe out several lesser empires before they are brought under control. The idea may be to add some risk to cutting off the head of the dragon so to speak, having the massive clawed body flopping about wildy all over the place, but it has a larger impact on the other AIs than the player.

And ya, as I see it the normal AIs use a single blob of units for all their tasks, both offense and defense, and they spend most of their time distracted and ping-ponging their force all over the place (if it's not stuck staring at a failed objective, there are bugs involved). I think the thing with the gray AI is that it's set up from the beginning to handle multiple forces all over the map and not care about moving all it's forces to defend one town from a random imp attack. Which works a whole lot better in providing a challenge, even if it means while it's wiping out empires on one side of the map I'm freely wandering around taking stuff back on the other side.