Some TW games do have a great AI, for example Shogun 1, Medieval 1, Shogun 2 and for the most part Napoleon Total War. But apart from that, TW's AI needs to be tweaked for an year by both CA and modders before it is considered good. Meanwhile although Civilization 5 is great, it lacks many features from previous games and I think Civ 4 is the best.
I too think they all have declared war on each other. PDS is fabricating claims while using spies and attrition-free troops, Firaxis is denouncing both of the others while proposing resolutions against them in a virtual United Nations that their faction dominates, and CA might've simply sent a diplomat with written demands to hand over their cities and castles to CA or face four crazily huge angry Imperial doomstacks that tear walls like paper and troops like wheat.