Not even a sign of AI trying to flank me and attack cities farther away from the front lines...
One step at a time! I'll take any attacks as progress. I've seen the AI ignore undefended cities on several occasions, and it's been reported by others as well.
In any case I believe "send an army to attack the enemy capital" is one of the programmed strategies. It's happened to me once where it ignored the city I'd just taken and sent the army to attack my capital. On a couple of other occasions I think attacking my capital rather than my border city was what the AI was trying to do.
The problem has been that the AI didn't seem to re-evaluate its target based on what was around it. So it wouldn't take undefended outposts and cities it passed if the stack was supposed to be doing something else, e.g. attacking a different target. In some cases standing around doing nothing seeemd to be higher on the list of priorites than taking a city two moves away. If the AI has got better at attacking targets of opportunity it will make quite a significant difference to the difficulty. At the end of my last game the AI seemed to be much more effective at targeting my border cities, however that was on a game I started before the 1.2 release, so it may have just been that the old logic worked fine in that particular situation.
I live in hope the AI will get better, its use of strategic spells has gone from zero to occasionally devastating over the last few months. Improving its use of tactical spells would also be nice; Mass Curse or Fireball over Burning Blade every time, please. But as I say, one thing at a time.