This was covered in a great talk by Soren Johnson (lead designer of Civ IV): Playing to Lose: AI and Civilization.

His main thesis is that players constantly demand stronger AI (that doesn’t cheat) but when they try it they hate it. The issue is that strong AI doesn’t role-play like an actual historical leader, it plays like a “gamer” who will stop at nothing to win.

That is, strong AI opponents treat Civ like a game of poker and they’ll use every possible means of defeating you. They’re not reliable allies or trading partners, they’re bluffing, duplicitous liars.

Human players who play against such AIs report a very negative experience. Many of the diplomacy functions in the game become rather useless against such an untrustworthy AI, and the whole situation devolves into something more akin to “turn-based Warcraft” rather than Civilization.