It seems on a whole like the A.I. doesn't care about exessive military spending. Every time I play versus a normal A.I., it immediatly puts all its efforts into pumping out a crapload of soldiers, regardless of the cost. It basically impossible to take the diplomatic route, because after 100 turns, the enemy has humongous armies which lead to a -8 in diplomatic relations, so therefore they attack and you die. Even if you've put all your research into diplomacy, you can't negotiate a treaty for shit if the enemy (who hasn't researched diplomacy at all) has even one soldier more than you do.

In GalCiv2, you could survive by hiding away for a bit and being really good at diplomacy; here, you get crushed unless you go all out on the warfare front.

Well, I usually spread my research out quite a bit (other than like only 1 diplo tech for Caravans)

...

and I usually have the strongest military UNLESS! I cannot find a gold mine.

It's not so much the massive military spending. Rather that that he spends 330.2 gildar per turn on military units, and only makes 16.3 gildar per turn. And that those hordes of units have ultra fast movement, massive attack, a triple damage attack ability, and immunity to spells.

True, they have taken a beating. Even so before taking a few of their cities, their income was only around 100 per turn. They never made enough money to support that army, yet it kept growing.