In custom battles, I think the AI is pretty impressive (compared to vanilla RTW, not to a human player)
I've did a couple of battles of Koinon Hellenon versus Makedonia or Epeiros. The KH would be given one general and a bunch of classical hoplitai. The Makedones/Epeirotes would get a general plus a bunch of various phalangites.
If the KH is the AI, they deploy the hoplitai in a phalanx group formation, tight and with additional units in the back rows. They march the hoplitai coherently and attack my phalangite phalanx, and after a while they break through and sometimes even rout part of the line, especially Phalangatai Deuteroi are vulnerable to this.*
If the AI is Makedonia/Epeiros, they almost always manage to keep their phalangites in a coherent line. Using hoplitai, I can still afford a head-on clash and win through, but it's risky and will cost you a lot of men in the end.
Of course, in those battles there are no skirmishers present. The AI will probably break formation if you bombard them with stones or arrows. I agree with Paulus on this one, players should take care not to abuse the effectiveness of slingers if they want hard battles.
One large problem is be the campaign AI, who doesn't use any sense when composing their stacks. It's not uncommon to see stacks with lots of akontisai, pantodapoi, and only 2 or three elite units.
Still even when playing campaigns I'm sometimes against an AI army with a decent composition wich can often put up a good fight, or even win occasionally.
*(people will probably say that I should use Hoplitai Iphikratides, but I was trying to reinvent classical phalanx strategies, and Hoplitai Iphikratides have their own drawbacks wich I won't go into.)
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