I've seen an AI build one...or at least get the first constructor to start it. Them actively pursuing all 5 techs AND making it operational AND effectively blowing up a planet? Nope.

My guess is that only the higher intelligent AIs would know how to use a TS, however they also know the downside to using one, so thus they never get used...

By the time things like terror stars become an issue I'm usually light years ahead in the tech race in every game I play. I have found them useful sometimes. Their best use is blowing up barren systems that noone has planets in since you can turn that colonization resistant rock into very nice asteroids. Terror stars are also nice if the enemy has 3 or so planets in a single system and a lot of population. The key is building the star right near the system so its only a few turns away from detonation once hostilities start. Once you have the techs its very very easy to make multiple terror stars. Just put one at the edge of each enemy system and presto, a 5 turn war. If you don't have the edge of territory requirement from united planets you can be really cheap and place the stars plus an escort right next to each sun and start/end the war with 4 full detonations. If somehow you are fighting a stronger opponent you can take him out instantly in that fashion.