Many folks have claimed that making peace with the AI is impossible in 1.03. I do not find this to be an issue. Most of the times, the AI does accept a ceasefire (and even grant trade rights within the same deal) if you have beaten it in a few battles in the same turn when the ceasefire offer is made. Sometimes it's even ridiculously easy...

Example: Maratha would declare war on me in India and blockade a few of my ports + send a couple raiding forces into my territory. I would defeat their fleets + defeat the raiding forces + move a big army next to their borders and offer peace + trade rights. Most of the time, Maratha would accept immediately... Sure, they would re-declare war a couple turns later, just to have the same beating and resulting peace. Finally, around 1760 in my game, Marathas 'calmed down' and have been happily trading with me for more than 10 years...

This seems to work with other major factions too, most of the time, but not always. Sometimes I need to give some territory back. All in all, 'making peace' seems to work best with major powers; the minors seem to be more stubborn for some reason. The key to 'peace making' appears to be several successive victories over the AI within the same turn the peace offer is made. It seems, losing several (small) fleets is a very big hit to the diplomatic AI morale.