I can't say I've really ever seen a case of the AI attacking "intelligently." Oh they do attack, and they attack often but there's no reasoning behind it that I can see other than an attempt to defeat the player at any cost, including the obliteration of their faction. I can, on my end, understanding the point that the smaller factions will hate and attack the player once they get very large. You'd think however that those small factions could at least strengthen their position against other weaker factions before attempting to attack the player in a hopeless show of force.

In my 1.2 (official) French campaign I've obliterated the Scots, Spaniards and English, I control all lands from the Iberian Peninsula to a long frontier line running from Antwerp to Marseilles (Genoa has been annexed but there are enemy territories in between). For a long time I did manage to hold alliances with many factions, it seems however crossing the magic 15 province barrier caused everyone and their brother to hate me. I had a war against Portugal decades ago and they still hate me, and they still wont accept a ceasefire. They're down to one territory and their odds of winning are zero. The only reason they're not destroyed is they've only got Marrakesh and I have no interest in invading Africa and opening up a new border with Sicily and the Almohades.

I personally miss glorious achievements and I don't see anything to indicate that the AI plays to win or could ever be programmed to play to win. I like to role play my factions as much as anyone else and I have more interest in internal development than capturing 45 territories and Jerusalem. My attacks are usually dictated by ecclesiastical policy, and I find even when I'm content to leave an AI faction in possession of a single province they'll never accept vassalage and they'll do all they can to attack later on (hopelessly of course). As with RTW I think vassalage should be removed from M2TW as it is a useless (and effectively AI only) option. I've read some tutorials on how to get a vassal but it seems the hoops you have to jump through are such that the vassal will then be powerful enough to attack you anyway.

I will say this though the AI in 1.2 has thrown me a curve ball in at least one respect. For some utterly bizzare reason the Scots attacked me long before I'd even conquered England. I had no border and no diplomatic contact with them yet they were landing full stacks at Bruges. They didn't survive as I outlined above but the invasion was very surprising. Anyway in conclusion I see no difference between 1.1 and 1.2 regarding alliances, they're in general useless and serve no real purpose that I can see, except amongst AI factions. Anyway cheers!