Privateers for Dummies...

I admit I'm not a master of the AI's attacking mechanics, but from what I know of warrior hiding/choking on a forest hill vs archers when worker stealing, you can probably get away with stacks of 1-2 privateers if they have full health, or at least 5.2+. In fact, I can attest to it from playing my last game. I was semi-isolated (and then soon isolated :) ) on a monarch game, and the only one who ever attacked my uninjured lone privateer stacks was Napoleon. There weren't any other notable risk-taker types in my game though (later, Napoleon risked 4 galleons and 7 caravels on a destroyer of mine in a coastal tile because, although it was combat 5 from its time raiding Napoleon's seas as a privateer, it was "injured" at 29.3 Health)
 
I've only tried privateers two or three times but, following the advice of this article, I used stacks of 4, built in +5XP drydocks: three Combat II and one Combat I/Medic. Single frigates have attacked a stack; once in a while a Combat II privateer survives, but if it dies a second has a chance to sink the privateer and the third serves as a protector while the medic speeds up healing (I move the stack beyond the AI borders, of course).

I've sometimes had enough production to blockade all the target's port cities, plus have a spare stack hanging around to replace one that is off healing.

In one game I got a couple of Blitz destroyers and eventually Shaka tried to invade with galleons; two Blitz destroyers took out his entire stack in one turn. That was lots of fun, but is likely rare. It was when I was playing Noble, where everything is easier.
 
I regularly use this type of Privateer strategy and find it very effective.

In my last game I positioned small groups (2-4) of privateers wherever I found marine resources or AI naval activity. My privateers would usually wait in AI coastal cities to ambush any AI triremes/caravels/galleons and plunder resources as and when workboats got them up and running. Healing damaged privateers did not require multi-ship stacking for safety, I'd simply harbour them in AI cites for rapid and safe healing.

As the OP suggests, I too find it best to monitor AI research closely and get all the privateers back home safely once frigates enter the game.

A fairly modest fleet of 8 or 9 privateers was more than ample to earn 3 Great Generals, make significant pillage gold and hinder the economic development of key rivals. Best of all I had 5 blitz promoted privateers ready to upgrade to blitz destroyers when the time came and another 3 promoted to Combat 3+.

Julius Caesar's frigate/galleon surprise attack could not land one invader on my lands. His invasion fleet was destroyed in one turn. My small fleets of blitz destroyers have achieved this in many games. And yes, it is fun!
 
I'd simply harbour them in AI cites for rapid and safe healing.

This is not possible since privateers are treated as enemy units for everyone expect the origin nation, you can't go inside enemy ports. ;)

What you can do though is to set up your own "privateer harbours" on the map, in the vincinity of the AI.
Maintenance is an issue but for roleplaying games, this is a lot if fun.
 
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