These are persistent and frustrating bugs. Your game is very close to legendary, but dumb AI behaviors and persistent glitches are frustrating.

Please... 

Perhaps, but the 1.5 changelog noted that "Caravans can’t be targeted by spells," and this is clearly not the case so it is a bug.

I can also add that a few turns later the AI sovereign sent in another of the wandering pioneers to attack the same city alone, so this definitely needs to be addressed.

I definitely believe the caravans shouldn't be a valid target for strategic spells.  The computer will very likely always target your caravan because they will be inside of their territory.  This causes the Channelers to fixate on these all-but-meaningless caravan units.  The Channeler then spends large sums of mana using spells that have re-use timers which should be preserved for targeting army stacks.

It's beyond absurd to witness the message cards pop up with a supposedly competent enemy leader stating that you need to fear his mighty power as he spams Tremor on some autonomous wagon the player has zero invested interest in.  Its a tremendous waste of resources and results in a laughable result that no one cares about.  It in no way contributes to the challenge of winning the game and it actually makes it easier for the player to compete with that leader.

tldr; this bug diminishes the game and is clearly not desired by the game designers.

Interesting.  Testing here shows that the code change (in code the can cast on target unit function just returns false if the victim is a caravan) is working.  I will see if I can find how it is getting through.

http://screencast.com/t/XtrLm0FrJf

Found the problem.  It will be fixed.  Thanks!

Essentially the AI was doing all the appropriate checking to make sure it was able to cast the spell.  Then it would go find a target and it wasn't doing that last step of making sure the target was valid for the spell (which is where I added the check to make caravans invalid targets).

Yes it works, and you can mod it in...

Just makes them immune to attacks, not spells. If you want spell immunity add the ability to the unit "TraderTest"

<SelectedAbilityBonusOption>ImmuneToMagic</SelectedAbilityBonusOption>

Boom ALL caravans are immune to any magic, and have a trait saying so. I was surprised that they went to the hardcode route instead of adding this ability to "TraderTest" to achieve the same results. I'm sure there is probably other reasons that I'm missing.

The bonus is 10% to 25%. I agree that it won't destroy the economy, but I was throwing the AI a bone. I think that the cycles to reach that level is set WAY to high. Might I suggest other milestones for the game...

5 cycles to reach path

15 cycles to reach road

30 cycles to reach highway

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A simple computation of a caravan between capitals and the time for upgrades...(Note: this is assuming your caravan doesn't get destroyed for any of the trips, cause then you start over)

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Scenario 1, connect two cities with their capitals... a reasonable (small) distance to this would be roughly 20-30 tiles. For ease lest us say 24 tiles. This means that it will take 12 turns before a caravan has completed one cycle. Times 100, would mean that it would take 1200 turns before you have a highway after you started with the caravan (not the first tech in the game)... (Edit: Since there are two caravans on the same path it really is 600 turns)

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Scenario 2, suppose that you have two really close capitals, then say you are roughly 8 - 12 tiles away, let us go with 8 for cheapness... Then it will take a minimum of 4 turns per cycle. Thus, at 100 times one has 400 turns before you get a highway. (Edit: Since there are two caravans on the same path it really takes 200 turns)

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the modified numbers Scenario 1, will take 360 turns... before highway (Edit: Really 180 turns as there are two caravans on highway)

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the modified number scenario 2, will take 120 turns... before highway (Edit: Really 60 turns as there are two caravans on highway)

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I find that Scenario 1 is the more plausible version, but even at 60 turns it would be nice to see a highway in at least some game.

Exploit below

For those that want to exploit this, the count starts everytime the caravan returns home... hence you can move a caravan and move it home several times in a row