I don't think anyone is declaring the M2TW diplomacy as perfect, simply that it is not as random or as bad as many percive it to be...
Basically the way the AI is program, through choice or fault, it does not deal well with being bullied into something. In a game of diplomatic chicken it never blicks and it does not bluff (as far as we are aware). It never backs down and will fight to the end and all deals have to break even at the very least according to some formula (which may change with difficulty level).
I wonder how aggressive it is programed to be? If an AI faction is hemmed in by other factions it is allied to what logic actually determines whether it should attack and whom it should attack (Weakest? worst relationship? worst reputation? the player?)?
Hopefully the fact that much of this has been expressed externally in text or XML files means we have a chance at finding out once the patch/unpacker comes out...
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