Over the past few days we've been cleaning up things in preparation for the 1.3 release.
+ AI will play harder in campaign at lower levels (AI was designed to be somewhat nerfed on the early missions of the campaign to give players a gentle introduction.
+ Various improvements to the Terran Alliance and Arcean AIs.
+ Made some tweaks to show ships are designed such that even if they prefer to build ships with a particular weapon system, they will also bear in mind what types of weapons they have already researched (i.e. they may WANT to put beam weapons but if they only have Laser I but have Black Hole Generators for mass drivers it'll still build Black Hole Generators on their ships rather than just tossing a bunch of lasers on a ship simply because they prefer beam weapons at that point. It did this before but now it has a better algorithm)
+ CPU for AI algorithm option enables AI ships to be re-designed twice as often.
+ Terran Alliance based AI players will put early priority on factories as the first thing to build rather than star port.
+ AI players will not go to war for military reasons unless they have enough military forces to deal some immediate pain.
+ Lots of little AI tweaks
+ Changes in values to planetary improvements and starbase modules
+ Starting population now 8 billion on the home planet
+ Morale on home planet gets a 20% bonus
+ AI will tend to try to "finish off" its enemies
+ Changed difficulty to be based on the AVERAGE AI intelligence rather than the highest AI intelligence
+ Torian AI significantly altered in what it builds on planets.
+ Torian AI will raise taxes as long as morale is high
+ Terran Alliance AI will lease less often (stunted early growth)
+ Drengin will build more scouts to expand faster
+ All AI will tend to mobilize for war now BEFORE going to war (i.e. start to send ships near the border rather than declare war and have months of phoney war. We have ideas on making it even better in the future.).
+ Starbase modules give more boost earlier and less later as you add modules
+ Fixed weird issue where AI would turn off social production between projects and then the AI would see that it has no social production and would then pick the cheapest (rather than the most appropriate) improvement to build which (wait for it) would tend to be economic improvements.
+ Morale ability has more diminishing returns at the high end. It still is powerful but a 200% morale ability is not twice as good as a 100% morale ability.
+ Integrated concepts from other AI personalities into Terran Alliance personality
+ Fixed several crash bugs we added during the betas.
+ Fixed some typos
+ Fixed beta bug where new city lights took away clouds
+ Some additional text polishing
A lot of this boils down to fixing bugs we've added during the betas, polishing areas, and in my case balancing things to go with some of the changes we've made. I also spent some time on the AI that I hope people will notice.
I still have some major complaints with the AI. the funny thing about writing "smart AI" is that you often run into three different issues: a) Knowing the strategy 
Convert the strategy into code and c) Making sure that the strategy actually works.
It's item C that is the most frustrating at times. You'll see the AI do something incredibly stupid that you have code in there explicitly to keep it from doing that. Case in point, I had a mega fleet that I created (cheat codes) and the AI just bounced endless weaker fleets off of it. I have code that is SUPPOSED to make a reasonable guess whether it can win or at least soften up a given target. If it's hopeless, it should back off. Yet I saw the Arceans waste half their military banging into this invincible fleet. Another one that kills me is that the AI is SUPPOSED to mobilize for war. When their relations with someone start to go down, they're supposed to start moving ships and fleets near the border so that when they go to war, they're organized. Instead, I'll see the AI declare war and nothing happen for many game turns. Naturally, any time I go to debug it, THEN it works. Which is how many of these problems go - they sometimes do work as designed but often won't work at all.
One complaint that I addressed last night was the nerfing of the AI in campaigns. The AI is really dumb in the first several missions of the campaign. But it ended up being TOO dumb. At higher difficulty levels, it shoudl start to get smarter. Subtlety is often hard to code in.
The amount of time it takes to debug tactical based military moves is what really causes the most pain. But it's something that is the most rewarding but takes the longest to test. The AI in GalCiv 1 was horrible at actually fighting wars. You ended up with a death train. This time around, the AI is much better, focusing its military. But I still see it do things like leave an undefended planet (one it just wiped out the defenses for) before the transport arrives. Another I saw but couldn't figure out how it happened was Arcean over-construction of freighters even though the code explicitly says IF # of TradeRoutes is >= NumberAllowed then don't build any freighters.
You might be surprised how often changing a number makes something like starbase building go from not building any starbases to building hundreds evne though the changes would imply only a slight change. Such is the nature of AI development. 