This was partially because I've always felt that production time was always too high, but also to see what the AI did.

After playing through around 100 turns (with no other modification) on Very Hard I've noticed that the computer does a little bit better. All of the computer nation's cities are defended with a decent amount of units (5-12). There are also units wondering around and going after cities. These units tend to be fairly small, but not overly so (usually around 5).

The computer also seems to be using navy. One of the nations built up a fairly large navy of tiremes (al la Greece vs Persia) and invaded me. The remarkable thing was that their first strike the turn after they declared war was to decimate my small navy (I had been been fighting a land war elsewhere) and then ACTUALLY LAND TROOPS and take two of my lightly defended cities. It suprised me when three longships arrived together and all unloaded troops.

Soon Ship of the Lines started showing up and controlled the seas before I developed and built Ironclads. Furthermore, the computer quickly reinforced the cities that it had taken with more units so that I had to launch a decent offencive to take them back.

The main point of this, I guess, is that the AI both started using larger groups and started using navy and naval transports with nothing more that dropping production costs.

The AI is still rather stupid and falls for easy tricks and will not attack if it is being defeated. I have not played far enough through yet to see what it does with air units and carriers, but if I find time this week I will keep playing through.

Do let me know of your progress, since if this works, it could be one of the more simple modifications to improve AI, even though it's not actually located in the AI directory.

I have noticed the AI doing things that others here complain that it will not do. For example, in my game the Polynesians have always been very active in launching naval assaults against the Welsh (both civs being very aggressive about settling all the little islands) and the Indonesians have also started doing this as well. They DO NOT stack boats well except for subs and they DO NOT conduct naval bombardment as well as CTP1 did but they DO load tanks and artillery on transports and land them on small islands to capture the city. And they also DO NOT use aircraft on carriers. Maybe if given the resources to build a proper military then they will use the units a little better.