I assumed very hard on campaign would cause the AI to be more agressive towards each other, and not just me. Is there any way to change this or was it intended to be this way?
Very hard gives the AI more money. This might make them more aggressive at the beginning as they build units every turn in every city. The extra units *might* also mean they depopulate their cities faster than on lower difficulty settings so they eventually run out of steam and stall.

The higher attack stats on VH *might* also effect ai vs ai battles in some way in terms of higher casualties which would increase the depop effect *maybe*.

Another thing is the AI tends to attack other ai factions according to their relative strength (the player too but less so). If they all have stronger armies cos of higher money then they won't be more aggressive towards each other.

Basically VH doesn't make the ai more aggresive directly. It just gives them more cash which can make them more aggressive indirectly.

The other thing i noticed recently while experimenting with the vanilla game is the ai constantly stalls because of path-finding problems. They have a target city and can't work out how to reach it and the whole faction does nothing until something happens that un-sticks it, like some rebels spawn and a stuck army moves to attack it and then afterwards it can find path to target city from new position.