I think the extra XPs were added to balance the late game wars when we guys don't even bother with units with under 50 xp, which are easy to get from barbs and the like. The AI often doesn't realize the huge important of elite units and won't farm xp as efficiently. For example, I will always attack some barb at 85% odds with any unit level 4-5 and under rather than defend at 99% to get 3-4 xp instead of 1. The AI will never do that. Thus, the extra promotions help the AI a lot in mid-late game.
As noted, there are two problems with it. First, Beeri Bawl is screwed. Second, early game when the human lacks elite units as well, the AI pumps out combat 3-4 warriors with minimal effort and kills you.
The fix is very simple in my opinion: add a number of free promotions at construction that is based on the unit tier. 1,2,3,4 for 1,2,3,4 tier units on Deity, 0,1,2,3 on Immortal etc. That way, early game you only have to face combat 1 warriors, but late game when your beastmaster is a 150 xp monster upgraded from a scout waaay back, the AI will at least have a fighting chance with a combat 4 BM from the bat.