As far as your realism point:
Civ is designed to be a strategy game, not a simulation. So expect realism to take a backseat for gameplay purposes. This just isn't the right game for TOTAL immersion. However, if you have any specific suggestions for realism improvements that do not sacrifice gameplay, those would be interesting. And in general, with almost every game, realism will take a backseat to gameplay. Having a fun game is more important than a realistic one. At least if you want to sell copies and have people play it
As far as how the AI behaves:
It's really difficult to program an AI that behaves differently across different difficulty levels or parameters. Not saying it's impossible by any stretch, other games have successfully done it - but the level of investment in terms of man-hours is much, much larger. Firaxis sort of tried to implement this with the flavors (and certain flavors are increased on higher difficulties, notably aggression and expansionism). In the end they were able to make a pretty decent AI that plays vastly differently and in difficulty across the different difficulty levels.
Having said all that, the AI is really bad at behaving like a real nation would. I do wish they'd improve that.