There appears to be a bigger penalty for invading in Civ V

With the denounciations, etc what not.

I was playing as Rome on the Alaska map (Strait something) and had 7 cities, while Ethiopia next to me only had 3. They started on the coast and I in the middle, they were stuck after I expanded to them. My military was more than twice as powerful, but I was reluctant to attack because of the diplomatic consequences which may lead to military. The Inca was to the right of me, then to the North after they wiped out Denmark. America was to the south (on the south-east of the map) and they had a terrible starting position. I coulda wiped out Ethiopia easily.

After you attack another Civilization, when you speak to other leaders "The Bloodthirsty one is here" comes up on the screen. Plus all the denounciations. What do you think? Should I have gone for the kill? I wouldn't have hesitated in Civ IV.

You are rewarded in Civ V for leaving them 1 worthless city. You are also rewarded if you can bait them into starting the war (e.g., having archers ready to become crossbows, or defense agreement with third party and paying them to attack third party). Complete elimination carries a diplomatic penalty. Declaration of War also carries a diplomatic penalty. (It can often be rather effective to game both systems, crushing a civ, minus 1 city, with no diplomatic penalty.)

Understand, the AI may cousin up to you and wheedle, but those civ's don't like you. They don't like each other. The point here being, they look for cassus belli at every turn.

So do what you feel you need to do.

I wish when I saw an advancing AI army on my border I could issue that demand to know whether they are going to declare war, and force a big diplomatic hit on them if they lie about it.

I would like the opportunity to get that first strike in that the AI sometimes gets on me as a result of that...