Does the game scale its bonuses for AI controlled players in proportion to the rate of progress the player has selected for the game?
No, only scales its ai bonuses with difficulties as far as I am aware (Its supposed to be like that anyways).
I recently was watching the power rating of the AI controlled characters in the kingdom report, and it seems to me that with "hard ai" with epic (slow research game scale they gain power approximately twice my rate while on "challenging ai" with epic game scale they gain power approximately my rate.
The HARD ai gets "cheating" bonuses to wealth income and whatever. The game is very different on the epic pace setting, I hardly would recommend it.
The AI is pretty decent at ramping up a proper economy, and build lots of units. that said the current power level says NOTHING whatsoever about anything except give a rough estimate of how many troops (good or bad, doesn't matter enough) and the overall economy of an empire, I find that if I spam stupid militia with high attack power but low initiative I will get an artificially high power rating.
Alternatively, is there some difficulty setting we can use between "challenging" and "hard". I am still learning the rules of the game and I am not prepared to jump into a 2x difference in effective power rating. Of course, I have only two sample points here, so 2x is a dubious number. Still, so much is undocumented...
Challenging is the full AI without any "supposed" cheating (There have been witnessed some anyways, but that is bugs and not deliberate cheating).
Bear in mind I have used "cheating" for artificial bonuses not granted to the player, like the AI getting 10% more income, due to difficulty.
That said, if I was you, I would try out one hard game, if all goes bad you will lose your game and know that you are not ready for hard yet.
(That said, I personally don't mind losing, as long as I don't lose to something ridiculous, like the spider event spawning at the exact turn 100 count, just saying because my point of view is pretty biased 
).
I find the difficulty that is "fairly easy" to me, is a difficulty where the AI will always outclass my powerrating, as it doesn't matter in a real war. I usually have a few stacks that sweep off AI units off the board, but the AI have a lot of units which is why its powerrating is high. (high quality units is pretty much way better than high quantity units).
Sincerely
~ Kongdej
