Apparently, the AI doesn't pay upkeep for its units (someone correct me if I am wrong). So if you try a slow expansion I assume you will encounter larger and larger AI armies as it builds its forces (there is no financial disadvantage to having huge armies for them, except for the initial investment). Wars between AI's might keep there force levels down, but best to strike decisively and really hurt an AI before it can recover.

The developers probably use this feature to compensate for the fact that the player is getting extra florins by doing "council of nobles" missions, and the AI is not. It would have been preferable in my mind just to make the king's purse larger for the AI factions, and scale the value in proportion to the difficulty level.

Instead the difficulty level affects to what level diplomatic relations tend toward, all things being equal (tends toward friendly at easy, abysmal at very hard). Not good...just give the AI more money on harder levels and let diplomatic relations evolve in a more realistic way.