Playing games on difficulty settings ranging from normal to challenging to hard, I have never had the AI declare war on me in something like 5 or 6 games (except, obviously when I walk into their cities with a cheesy rock giant). I play aggressively though.  Usually the AI are busy defending against me and my army of cheap, overpowered summons.

If you're not going to play militarily aggressively in games like this, then, as in real life,  you *must* have a well developed military deterrent, and you must aggressively pursue *diplomatic* avenues to stave off invasion. Develop treaties, trade routes, exchanges.  One way or another, even if you are not invading, you cannot ignore the AI, leave your military undeveloped, and hope to keep their greedy hands off your land. 

Yeah it is one of the things that bother me.  All of the nations are filled with evil bastards.  WTF!?  Why is every single person in elemental a warmongering psychopath?  The only way to keep the peace is by having  the largest army anyone has ever seen.  Since all the AI does is spam cities and armies, it means you have to no matter what victory condition you want to go for.  I could see some cultures being warlike... but all of them? Really? A world full of Spartans.

Maybe it's because I generally play on normal difficulty, but I do not find the AI to be too warlike.  If they sense weakness, then yes, they can attack.  But often there are warning signs (like demanding tribute).

We are not talking about the modern world, remember.  This is a fantasy world, and most (not all) fantasy worlds are loosely based on the middle ages, a dangerous time for more reasons than just disease and famine.  Hell, the pope would declare a crusade to send people off to kill each other in the holy land, just so they wouldn't spend so much time killing each other at home (and yes, I know this is a gross oversimplification, but it's still true).

Amen to that.

Don't know how much 1.08 has improved AI yet, but in one of my 1.07 games, I had two AI opponents: Magnar and Capitar.  The Magnar completely dwarfed us both and the Capitar kept telling me, "The Magnar are really powerful, we have to stop them!".  However, the Capitar was at war with me and would never accept any kind of peace even though he was getting the crapped kicked out of him by the Magnar.

I was really hoping for some kind of Lord of the Rings alliance to go up against the might of Mordor, but alas the AI was too dumb to realize that.

Well, the price of freedom is eternal vigilance