It should be reasonably dangerous - you'll probably lose most of the unit you send to bash open the gate, and boiling oil is no respecter of high hitpoints, so don't send your general But on the other hand we didn't want to make it impossible for the AI to break into a castle without artillery. The finely-tuned balance at which we arrived is that the gate has four shots of oil, there's a brief timeout between each, and it won't take a shot if there are too many friendly soldiers meleeing in the gate area. However, it won't mind inflicting a few casualties upon itself if it thinks the enemy will suffer more :)

The sound effects are fun too. For those who haven't heard them in-game, they're the three pourboilingoil WAVs in the sounds\battle\troops folder under your VI install.