AI is extremely stupid when it comes to navy invasion. They will drop a couple of outdated units once a time, which can be easily taken out. Besides we have dromon, so we are safe.
Plus, even if they get to us, they'll have, what, swordmen against our pikes and MDIs.
As I mentioned after Copernicus and before Newton, we should build up our military (not much, 10 units at the most). It's not just for war but also for protecting our iron and avoid AIs settle too close on it so we need a blockage.
That said, I don't even think we should always "call their bluff". If they ask a tech or two once a while and it doesn't hurt, just give to them. The reason I didn't make peace with them was just for the happiness reasons, and if they get to us we can always make peace.
The challenge of this game as I see it is how to manipulate the AIs and use it to our advantage, and sometimes we have to make them stronger. Currently we cannot do 100%, and even 90% is at a deficit. This really worries me. We need to sell techs to the AI and get enough funding to continue the research at full speed. With everybody in ancient ages how could we do it?