Here's a screen shot from a game I was playing. Normal difficulty, epic tech pace, Stormworld mod installed.
http://i541.photobucket.com/albums/gg394/Djinn8/Map2_zps16d18c10.jpg
The screenshot was taken after I had defeated one of the AI who was spamming cities like crazy (red circles). The three closest to my lands in the south were raised to allow me to settle cities in their place. They were visible to me before I attacked, all three were villages, and I witnessed him building improvements in them as you would expect. As I pressed on I noticed that every other city he had was at level 2 and contained every improvement he could build at his tech level, including specialist buildings that come with level 2 cities. He had also managed to place down a couple of outposts in random locations (blue dots). The top three cities of his were built during the time I was attacking his empire. They were also level 2, with the exception of one of them, and each had the full lists of improvements built in them. I estimate it took the AI 8-15 turns to found these cities and have them running at max capacity. This sort of production bonus is so far-fetched that I find it hard to believe there IS a production bonus at play; rather the AI settles cities at max capacity if the player can't see what's going on.
The green circle at the lower right of the map is another AI who settled a city. Unlike the first AI he wasn't a crazy city spammer and his power level wasn't off the chart like the other was. What's noteworthy about this city is how it was founded. The AI had no access to this spot. The route to it was covered by an outpost I had built and at no point did he enter my lands. The city just spawned in that spot as if by magic, leading me to believe that the AI doesn't need to settle like the player does, but automatically generates new cities on a timer. This leads to AI cities with strange placements, such as founding them across mountain ranges that are inaccessible to them, but still within the radius that it is expanding into.
The third thing I've noticed is how the AI levels up it champions. I've had times were the AI has had level 10+ champions within the first 50 turns of the game and I suspect that the AI doesn't level up through combat, but rather levels up like monster camps do - again based on a timer.
Finally, I have a second hand account that the AI can claim champions who are inaccessible to them. The person who reported this had landlocked a champion with a raise land spell. The AI was still able to acquire the champion without meeting them. The champion had nowhere to go however and just milled around in its cage. Again this supports my theory that AI acquisitions are based on a timer.
It’s hard not to compare this game to Civilization, the two being so similar to one another. In Civ the AI is no stranger to cheating, especially in the earlier games. Still, in Civ the AI plays by the rules - it moves settlers to new lands; it can become a power house by accident when another civ gives it all its cities and gold, etc. It can make for random games. I suspect that nothing in Fallen Enchantress happens by accident. At the start of the game the AI must be set a power level, or the speed at which it grows and as the turns tick away it automatically meets the requirements set for it. This is forth-wall breaking and limits strategic play as you can't deny the AI anything; only make yourself stronger by claiming some of its power for yourself. When you play against the AI in fallen enchantress you aren't playing against an opponent, you’re only playing against a timer.
