The AI seems to do ok with cavalry, as I have balanced vanilla like this. I mean they do as well with cavalry as they do with their other units (ie not very good).
It makes using cavalry quite a bit harder for the human, and makes battle a lot more interesting in general in my opinion. Cavalry becomes very specialized unit, they are very good at charging and breaking conscript town guard infantry (provided they don't have spears), archers and peltasts, or decent infantry that has been severly weakened or has been charged from the rear. And with the other changes to stats, they fit in very well. One of the general things I've noticed is that units on both sides will rout and reform during battles. So often the AI might be able to rout a group of infantry with a combined infantry/cavalry attack.
Previously, especially in vanilla, you would just run your cavalry around without much regard for them. Make one mistake and you'll see the remaining horsemen heading for the hills like this. But if you do it right, the enemy will be the one heading for the hills.
Lastly, just because cavalry is more "armored" doesn't mean they are better than less armored cavalry. Companions will be entirely different (not worse or better) than cataphracts for instance.
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