I don't like that. The game should get harder on the higher difficulty levels by the AI getting smarter. Not your units getting worser. While in terms of raw gameplay, the change in difficulty would be the same, whether you make it harder by decreasing the power of units, or by increasing the thought of the AI, it just seems like the "cowards way out" for game developers to do it that way.
It would be like a chess simulation where on the higher levels, the simulation is just as smart, but you start out with less and less pieces. If the power of my catapults decrease on the higher levels, the Ai's should decrease also. Otherwise, your increasing the difficulty by giving them an unfair advantage, not making them any smarter.