Not a bad idea. Small stacks (ie. maybe 2-3) is definitely something I will look into for a future update. Not gonna try adding something so complicated at this point though.
As far as difficulty, I would recommend prince for any small empires. It might be worth trying out King if you plan to play as a major power though. The AI will still be dumb tactically of course, but it will be able to replace units faster.
On that same subject, another nice addition this update makes are some changes to the AI. The targeting priorities have been modified so that it will go after units more often (as opposed to being obsessed with bombing the same city over and over...). Also it will hurry production much more often. That was something that really bothered me before, as the AI civs with great economies would often just sit on hordes of gold (sometimes >40k), all the while they are being overrun by an invading force.
I meant multiple units on the same tile, which is not possible in this game...
But yeah im happy you made the AI a little smarter, and now i wanna play on deity as Germany, and watch the USSR get 40+ conscripts and overrun me 5 turns after i declare war!