[BUG][.913] AI was allowed to build an outpost in right next to my city!

I am totally miffed since I can't raze it. Let me also say this outpost was placed down inside my boundary area for the city.   It was a neutral faction not currently at war with Tarth anyways.  Since I can't build anymore and I had a good spot on a river.  I am totally pissed about it.  Yeah I know come straight to the forums and rant about it.  This kind of thing totally kills the mood for playing or testing.  

Hope this doesn't happen to anyone else.  

On a related note,  the AI gets all pissy everytime you enter their territory but don't think a thing about going in/ around / thru your territory turn after turn after turn after turn.  After repeatedly asking them to leave your territory I might add.

I would rather not declare war with other kindoms and go after empires, but since they treat me like crap.  May just have to declare war.  However, I feel the AI should be smart enough to find a way to go around if need be, for whatever reason they want thru my territory.  I can use raise and lower land if need be.  Why shouldn't it ?