Silly and outrageous, yes; hilarious, yes; cheating, no. It's entirely possible given the game mechanics, and could just as easily happen to a player as to a computer. Especially in Vanilla, where Marines are only 8/6/1 (unsure about PtW, but not in Conquests, where they're 12/6/1).
Frankly, the combat system *is* my one issue with CivIII, as I much prefer the Civ2 version - have no idea why they changed it.