AI in TBS games is almost universally terrible. Generally the games are fun for other reasons (building your empire, exploring, customization, variety, random maps, etc).
I really think until we have some huge breakthrough on the AI front (and the people working on that are generally doing government/military/corporate work, not games), the best possible approach to the AI problem is not trying to emulate a human player at all, but rather, creating an adversarial AI that creates a challenging game.
AI War takes exactly this approach, and its quite fun - ALL of the civ style empire builders suffer from the problem of having an AI that tries to play the same game that the players do, and this never, ever works out perfectly. It also doesn't help that there's a huge segment of the player base that will raise a huge ruckus if the AI is 'cheating', nevermind that a human player has innumerable advantages over any current AI.
It's probably most blatantly noticable in terms of Diplomacy, which is almost always hilariously abusable by the player, and is either schizophrenic or useless in terms of interacting with the AI players, but it affects all aspects of the game. Generally tactical combat AI can be made pretty solid (HoMM, King's Bounty, Eador are all pretty good), but overall strategic AI? Not so much.
Anyway, this is all sort of a moot point, that sort of rework would be a whole new game, not a patch for Warlock. I do hope to see a game that uses the AI War approach to the design philosophy for an empire building TBS though, I think it could be a ton of fun. Toss out any concept of 'fairness' or playing the game the same way as the player and simply try to craft a game that can make for really tough, challenging matches - not by throwing econ boosts at an AI playing the same game as the player (but worse), but by creating a challenging game world to conquer each time.
