What is the CPU and graphics on your PC? I have found that the AI significantly improves with a better hardware, which is common sense. The AI can do more calculations and come with better decisions. E.g. I on my Athon XP 2500+ the AI is worse than on my E6400, not to mention the frame rates.
Do a little test. Start the Windows Tack Manager, click performance tab, then start the battle. Now and then pause the battle and Alt+Tab to the Windows Tack Manager to see the CPU usage. If you are close to 100% then the AI is taking short cuts to keep the game going.

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