Good AIs don't need to cheat to be challenging.
Planetary management is really tough to do for the AI.
It's something I continually work on. But one of the things that makes GalCiv II's AI unique is that it's not scripted. So it doesn't "know" that it should build X or Y. It does statistical analysis and makes judgements on what it thinks are good or bad outcomes.
But it also has to be able to do it with a minimum of CPU power. Now that the game is out and we have a better gauge of performance, we can do more on this.
But still, it's not about optimal designs, it's about whether it's playing a good game. Few people can beat the game at intelligent or above.
In most strategy games, the AI is cheating at all levels.
Besides, the way it cheats is not as annoying as in most games. Most, if not all, of the bonuses the AI gets are based on percentages of what it already has. So if you take their huge planet it will affect them just as much as it would have affected a player.
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