I think that this is a double issue.
1) AI should evaluate better before rushing, both if the Sovereign is involved or not.
About this, I'm confident that Brad will solve it as soon as he has some time to work on the AI and make it evaluate better equipment and so, as he anticipated in his last journal entry.
2) Empires and Kingdoms should not disappear when their sovereign is killed.
I'm more worried about this, because it is not a bug, it seems to be a design decision.
But it is a stupid one (no offence intended).
Nobody likes this, I've read a lot on forums against this decision and not a single post in favor of it. This makes the dynasty tree useless.
When the Sovereign dies, its empire/kingdom should go to his heir (with some penalty). This is very simple to implement, and can make the rush issue much less disturbing.
Then, devs can elaborate a lot on this (maybe in an expansion pack), giving us a possibility of fight between heirs (empire divided in two, first and second sons becoming sovereigns and in war between them) and/or a possibility of breaking in pieces of the empire (each town become a minor faction). These possibilities can be different according to the empire/kingdom (giving us another way to differentiate them).
A lot more ideas on dynasties have been posted on these forums, and I like almost all of them: dynasties can be the other strong point of Elemental, together with Elemental magic (which should be strongly re-designed to make it much more powerful and element-related (for example, no missing spells for defense, they should only fail if the unit has a strong element resistance for that type of element)) .