I've seen armies lots of times. Normally in the industrial age from a militaristic AI. The AI will use their GL's for wonders first, so if there are any available, that's their first choice and until the industrial age, there's usually a wonder available. Once the industrial age hits (and I grab all those wonders), when the AI gets a GL, they normally build a cavalry army. The problem is they usually only load it with 1 or 2 units (what a waste). I have yet to see the AI build a Military Academy or Pentagon, so it's probably the reason why the don't have many armies. I haven't played a lot of C3C with the improved armies, so hopefully they've gotten smarter about using them in that expansion pack.