Well I never play on VH since that has no appeal to me. The team has a money script which can be tailored to taste, and, since it appears to me at least that a lot of how an AI faction treats you is based on how wealthy/prosperous it is, I don't mind M/M at all. In fact, my Makedon campaign has had over 30 years of contiguous, peaceful relations (alliances) with the Sweboz and Arveni on my western front, both of whom share extensive borders with me. I have found, though, that keeping a minimum of 10 unit garrisons, preferably 3/4+ stack, in border cities is an effective deterrent as well, since the AI likes to target weaker towns. Without the extra 10k per turn VH gives, I found that almost all the factions cooled down reasonably well enough, with the only exception being the AS which gets mondo cash from the original money script. And even then it'll take a bit longer for it to pile drive its neighbors, and that's not a 100% guaranteed occurrence. The only "drawback" is that the Eleutheroi are dead in the water after turn 2 and they don't attack you, which is a shame. If I could only port that to M/M I'd be golden.
As for acting more logical on AI, they will, until the Hate-O-Meter builds up. When the AS originally attacked me due to Nikai rebelling (I didn't want it at the time) they fought a couple battles and then signed a peace treaty. They attacked again soon after, I beat the local armies, and this time took cities in payment. After the 3rd or 4th brushfire war the good ol' Meter filled up and its been a continuous slog for the last....45 years or so. Though I've now created a border with my allies the Pahlava filling in (incidentally, once I gave them those 3 extra territories they began pounding on Baktria badly, even taking Baktria proper). I've still got some AS holdouts on the Med coast but I'm using them as they and the Ptolies batter at each other. If the AS can actually bust into Egypt I'll be happily following right behind them.
On the plus side, now that I have no real active wars going my treasury is skyrocketing. Finally bust 1M mnai for the first ever in any campaign.