An even simpler way to fix the situation is to remove the artificial distinctions between units which allow for ahistorical divisions composed entirely of, say, archers, or machine gunners, or cannons. It's more than a bit ridiculous to think that you'd get a whole division or corps or army (or whatever you think the breakdown is in Civ) of just one unit type.
In my own game I did just that - removed all the ranged and siege units, leaving only a) infantry, b) cavalry, and later c) mech infantry/armor. Wouldn't you know: the AI not only does fine with this configuration, it's quite a bit better at troop use than it is in the vanilla game. By removing the rock-paper-scissors system the AI makes a leaps-and-bounds adjustment to how it uses armies. Also, promotions become far more interesting since its these things that serve to actually distinguish one infantry or cav or mech unit from another.
It would be nice to make the system more HOI-like, but I doubt the AI could handle that. I think it would end up benefiting the player but not the AI, which is true of the non-modded vanilla Civ 4 combat system as well.
Max