Like I said in the thread on the same subject a few posts down, I too favor monsters doing their jobs and patrolling their zones to discourage casual expansion, over taxing the player too much for simply doing what the game requires them to do in order to play the game.
Working to overcome the problem of a monster for a reward of a new resource is fun. Overly punitive taxation on expansion in a 4X game is not, although there's certainly room for fine tuning in there. Simple cost increases favor the AI on higher difficulty settings, and they still end up out-building you.
Also, as you said, the AI needs to become smarter about efficient building strategy over outpost spam, and poorly placed cities.
