i find that in mountains you have to carve your way through them, simply casting the spell once or twice wont be enough. I've never had the spell not work not.
Also, the terrain the cloth map does not update properly after the spell is cast - mountains on the cloth just dissapear as if the land went flat but there is still a hill there. This might be what is causing the problem.
Yes. ai's stuck in a circle do seem to be a problem, although if currently the maps are prepared in advance and you get a random starting point with your custom faction that is a cause for concern. Especially since it seems the only way to get the terrain spells is by choosing the earth spell category.
Flying units would help counteract this problem, put in flying units - that's the answer - hear that Stardock ? F-L-Y-I-N-G. I know. It's a dirty word.
although, seriously. slingers would be a nice touch - something to reach in the tech tree before archery, or ax throwing. (sword throwing ) (knife throwing)
javelins to take out the opponent's shield. etc etc.
eagerly awaiting v1.1 