I've been playing on a large map for over a thousand turns now. I'm just getting a feel for things now that there have been more changes and tweaks, so it started out with the world and AI's all at normal difficulty.
I built a mega capital, every wonder in the world in it, and once I learned every spell I replaced all arcane labs with tech producing buildings. Destroyed land and raised mountains to create three chokepoints around my city, with a city in each choke point, essentially making it so those cities had to be captured before my capital could even be approached.
I left one little hole open so that I could see how the AI would act.
Since meeting the first AI's, I have spent several hundred turns at war with them. I have yet to see their soveriegns. One AI was wiped out by another at some point, but it was in the FoW so I didn't witness it.
So on my game it seems like they're doing pretty well as far as the AI sovereigns go.
My thing is this, however - My sovereign is always on the front lines. A few heroes in maxxed gear and some decent squads and intelligent deployment, and I never have to worry about things. I feel like the AI instead of relying upon whether or not the sovereigns should go into their cities or go out and explore, I think if the AI just made better decisions regarding party makeup, tactical AI, and pre-planning on whether or not to fight or run, the sovereign would follow suit. The Sovereigns should be at the forefront of battles, they should be parading through other lands while they're at war, because it fits the lore. And if the sovereign is treated like a standard unit minus being expendable in calculations, then I think the AI would do much better.
But the AI in general is in need of a lot of work, and so the sovereigns will come with that. I don't believe it should be like chess in that as soon as the king is done, the side is finished and the board is cleared. Dynasty continuation would be good, or civil wars even with heroes taking over cities as city states. That'd be great too. Though that's not an AI issue, that's a functionality issue. But it would be a great short term fix for the AI. Dynasties = second chances for the AI making mistakes.