If you're in caravan range, the AI scout would've seen your capital anyway, and you have nothing to lose by selling embassy. If they are far away, there is also no loss to selling embassy as their army takes ages to get to you and you have ample warning to prepare. Also often deity AI will forward settle you anyway if they're far away and there's simply no point not to sell embassy.
Yes, that is true but installing a trade route or multiple routes to a neighbor encourages them not to attack you as it gains gold for them as well. It doesn't always work out that way especially if they have more gain from other routes to other AIs. Like I said, environment is everything. There is no perfect strategy. What helps is other player perceptions and advice over bickering and argument. Take it as it lay my friends.