One of the biggest pet peeves I still have about the AI is the fact that it still does things players just wouldn't do, ever.

1) It sends out lone heroes into enemy territory. It just shouldn't do that. Only in peaceful times when you're levelling your hero he might be on his own. Otherwise always accompanied by troops.

2) It makes too many unit only stacks and no stacks of doom. Players only make a few stacks and try to make them as strong as possible. The AI should really invest more time in that and not scatter its units so much.

I feel like the war declarations have improved in 0.85. Where as before most factions would figuratively skip being Hostile and just declare war, in my recent games only the war hungry (like Yithril) and neighboring factions have been declaring war.

CoreUnits.xml needs some serious attention. A lot of the poorly designed units are in that file. This won't solve the problem entirely becasue the AI can design units outside of that file, but it'll go a long way. If SD doesn't fix the file, then I'll be irritated enough to mod it myself.

The tactical AI seems based on distance, for the most part. Whatever is closest to the AI unit has priority. For ranged units, I don't think this is the case. It also seems like once the AI targets a unit, it targets it until its dead. It doesn't update. This lack of reevaluating the situation seems to be everywhere in the AI.

Yeah, the AI has targeted my ophidians with damage spells today.

Incorrect. No matter how it is implemented, the AI is an entire system, and the strength of a unit is a single evaluation function.

I obviously don't know what the algorithm is for evaluating a unit, but it is horrible, and improving it would probably be one of the best AI based ROIs left. 

For instance, whatever is causing air shrills to be rated high needs to be changed.