I dunno.. played a game on 1.1 just recently and the AI seems to have some faults. Playing with the full AI, but I refuse to allow it to cheat. We both are gonna play the same game here.
By no means is the AI bad, it just seems to be a push over. Take for instance, it's so easy to pick off a few small neighbors here and there and make yourself into an unstoppable force. Even though the "fear" thing is in place, I have no problem playing around with sliders, bum rushing a weapons tech, and churning out a few ships that no one dares to stand against me. It's fun, just seems to be easy.
What I suggest maybe make the AI a bit aggresive or maybe a few random events thrown here and there just to spice up a "sure fire win" when you get it. Who knows. Just a suggestion