I agree that normal campaign difficulty is the best way to have some kind of diplomacy. The downside is the without the ecomical bonuses the AI will have less units to field against a human that usually blitz.

My advice is for people to take their time. A human playing against the AI always cuts corners because we know what the AI can and can't do, so we neglect borders, we rush provinces that are empty etc etc. I find my campaigns to be more rewarding by playing on normal and using "house rules" to keep me from rushing the "dumb AI". I find it actually makes the game quite enjoyable.