The insta-building bug is alive and well in 1.02. In fact you can watch it happen right before your own eyes.
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If you look at the save or the screenshots you will see that on turn 70/71 the AI gets 110 turns of construction for free. It is a novice difficulty game. So that means instead of doing 50% production it jumps to 125% = greater production than challenging level, approaching hard. The research speed is about 5 times what it should be so instead of going at 50% of the player the AI is proceeding at 250%, all with a single city. This is not non-cheating AI and you are selling the player up the river by telling them that they receive bonuses to research and production compared to the AI on this the easiest level. God knows what happens on the higher levels of difficulty . . .
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I think this is a very worthwhile observation, and one that deserved it's own thread. Thanks for catching this bug, Feelotraveller, and for documenting it! [ I have reduced the volume of your Original Post in the above excerpted quotation; and I added Bolding, for the purpose of emphasizing the point I wanted to address. ]
I remain a Partisan on behalf of the Newbie purchasers of Fallen Enchantress, and those folks who are looking for a great 4X game, that is fun to play, even if you are not one of the serious Hard-core players (which form a majority of the folks on these forums). I want to see FE be as successful as it possibly can be; so that more games like it will be created.
Stardock has needed all along to attract the hardcore players who are always looking for a Challenge; and I think they have largely succeeded in that regard. Hooray! (Just to review the bidding, I am NOT a particularly hardcore player, but I Beta-tested FE since late February; and I LOVE THIS GAME.) However, there is a world of other potential customers out there, who don't want to buy a game with a harsh learning curve, when it is coupled with AI cheating, even on the Novice and (default) Easy levels, and a somewhat imposing and (relatively) un-friendly User-Interface. (I also think this game was released a couple months in advance of what was desirable for a well-polished game, but that is a subject for another Discussion Thread.)
Bottomline: you make a good point, Feelotraveller; and I sure hope that Stardock is seriously listening, when matters like this are brought up ...