Yeah, the difficulty level is very odd. I would like some official responses as well. As far as I can tell, it's like this:
Difficulty ---------- AI Intelligence
- Cakewalk -------- Fool (Basic AI, with their economy ran at 10%)
- Easy --------------- Fool (Above) and Beginner (Basic AI, with their economy ran at 25%)
- Simple ------------ Beginner
- Beginner --------- Sub-normal (Basic AI, with their economy ran at 50%)
- Normal ----------- Normal (Basic AI functions + Level 1 functions, with their economy ran at 75%)
- Challenging ----- Bright (Basic AI functions + Level 1 and 2 functions, with their economy ran at 100%)
- Tough ------------- Intelligent (Best AI - Basic function + level 1, 2, and 3 - with their economy ran at 100%)
- Painful ------------ Gifted (??? AI, no record of this AI, but it's probably somewhere between Intelligent and Genius)
- Criplling ---------- Genius (Best AI, with their economy ran at 125%)
- Masochistic ----- Incredible (Best AI, with their econmy ran at 200%)
- Obsene ----------- Incredible
- Suicidal ----------- Incredible
So the question to be asked is, what the heck is "Painful" and the "Gifted" AI?, and what is the difference between Suicidal and Masochistic? Personally, I have not seen any difference between the last three levels (IE: any strategy that works on Masochistic will work in Suicial - but those strategies are overpowering anyways, so it's difficult to say), and as for the "Gifted" AI, I have no clue, I can't tell the difference between them and "Intelligent". I suspect it might be their economy is ran at 110% or something base on the pattern, but it's just too small to notice any real difference.
(Let's hope the chart looks somewhat okay...

)