I have seen it happen to the AI a few times. It has never happened to me, but when I want to destroy a faction I find conquest easier - I just do not have the patience of assassinating all family members. Besides, if I have enough assassins or grand inquisitors to accomplish the task (and you need too many of them), this means that I have developped well enough and am one of the superpowers, if not the only superpower left in the game. And then the AI would never accept a marriage, even if I offer the princess (and I am not sure if you get lands by marrying your princess, or only by marrying one of your heirs to a foreign princess). Which brings us back to the discussion of the AI in terms of its diplomatic abilities - I understand that obstinate AIs willing to sacrifice themselves in order to create more difficulty for you is intended to make the campaign a greater challenge (and help the other AIs, if they have a chance), but it is quite unrealistic and illogical.
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