Copying report from another thread:
I just ran into another AI cheating bug.
In tactical battle, I've seen it cast burning hands spell on my archers that were on the other side of the battlefield. Flaming tongue too (not sure about it's range though). Also, A dragon used his breath that way too, killed my archers waaaay back (at least 7-8 tiles distance). Didn't hurt any troops in between.
Since it's tactical I can't really provide save game for it. It seems that AI ignores spell ranges on spells that have a range limit.