From my campaigns, it does seem like the AI get a static cash bonus every round on the higher difficulty levels. They do appear to me more aggressive as well. I wish CA would give us the option to turn up AI w/o just letting it cheat. I find M/M to be untastefully easy but I've hated cheating AI's since I started going to the arcade when I was 8.

The AI cheats on VH battles as well. I had a single "generals bodyguard" unit almost whip out two spear militias, two heavy horse archers, and my own general's bodyguard unit. This was while they were flanked, they get such a massive moral bonus that all they do is fight to the death (not the "I'm surrounded and will fight to the death" flashing red flag, but they have so much moral they just never route or stop fighting at their peak). I've heard that the VH battle was suppost to just be "most realistic" in terms of fatigue and moral, which might be true for your troops, but the AI get such a huge moral bonus it's not that fun to fight.

As far as a VH campaign goes, I started a turk VH/VH and was doing ok untill the 20th turn or so. The byzantines attacked 3 of my cites with 2.5 stacks and at this point I could barely afford 1 stack. so it's pretty clear that they were getting a good amount of extra cash to be able to afford all those troops. Although, they don't appear to be able to build up their cites much faster, so it could be money only for troops or an upkeep/recruitment reduction. Also if you keep an eye on the enemies agents, you'll notice they normally are at +8-10 skill while you'll still have all your agents at +1-3. I'd like a challenge, just not cheating. In RTW the AI got an extra 10,000 gold PER TURN! now think about it, how easy would even a VH/VH campaign be if you cheated as well and just "add_money" 10,000 florins per turn? sad, sad AI.

I'd recomend M/M if you want a campaign and battles where your not at a disadvantage simple because of a cheating AI. Although M/M is so easy that you might not have fun, so a H/H campaign might be the way to go since the AI only sorta cheats at that point.