So the AI is getting a massive overhaul for v1.4.  And I have to say, it's making a much bigger difference than we had originally expected.  

To be honest, I was pretty skeptical that it was worthwhile to have engineering time spent on improving the way the AI manages its planets. Not to be a a lazy bum too much but I figured it a lot smarter to just let expert players play against the AI with bonuses.  But as others have pointed out, the compounding nature of planetary improvements makes the bonuses we give too trivial.

Now, the AI is really quite good (better than most humans) at placing improvements in 1.4.  It will never be as good as the best humans (traveling salesman AI problem) but it's close to an order of magnitutde better.

They're also working on improving the way the AI designs ships.  Now this matters in a lot more ways than simply warfare.  In GalCiv II, the AI took into account the ranges of various things to decide how much range techs it needed and how much life support it should have on ships.  This is a non-trivial coding effort but needs to be done in order for the game to more challenging on larger map sizes.

Combined with the 1.31 AI update (the AI should be very noticeably better in 1.31 versus 1.3) I think that by the end of 1.4 the complains about GalCiv III's AI should be largely put to rest for most people.  We shall see. The opt-in for it should be available in a few weeks.