National prestige.

[Raygereio]

people keep saying it's "hardcoded" - whatever that means

Hard coded means that data is inputed directly into the source code of a program, instead of the program obtaining that data from an external source.

For example, units in RomeTW are softcoded; the program checks external files like the EDU for the units' stats, the model files for how the units looks ingame, the EDB for where it can be recruited, etc. All those files can be easily (and legally) be modified.
Other stuff, like the AI, are hard coded; the stuff the program checks for that is inside the .exe and can't be modified (As far as I know, the only thing AI related that is softcoded are the formations that the AI uses. And you can mod that all you want, but give an idiot a stick, or a full hoplite panoply, it is still an idiot and will only hurt himself with it).

The only way to change hardcoded stuff is to obtain the source code of that .exe, change whatever you want and then recompile the program.
Getting the source code can be possible, but the EULA (that long text you usually see when you install a game and skip over) says you're not allowed to do that and SEGA is not going to give modders the code and permission to distribute it as that would be effectively handing out free copies or Rome Total War.

So long story short; hard coded means it's way more difficult and in some cases impossible to mod, but more importantly, you're not allowed to.
Where does that leave us with the diplomacy AI? Well, unless one of the developers posts all the information on the diplomacy mechanics, we can only guess and extrapolate from what we observe.