i've been curious about diplomacy and this has been an interesting read.
outside of a few small inconsistencies i've seen first hand (like backstabbing from cultures that didnt seem that duplicitous from their cultural descriptions) the only problem i've had with diplomacy is late game CS ally purchases from opposing cultures. I've always had a sniping battle and the timing of when the UN vote comes up in the turn kept me from being able to buy the victory myself. I've only had one Diplomatic Victory (Siam) on difficulty 5 and that was largely due to lucky starting placement as i was surrounded by 4 or 5 CS's and only one culture (Egypt) on my continent (standard continents).
I dont know if that's a problem with the game or just how it works, but Diplomacy (and Domination to a less degree) has always been the toughest for me to manage. I dont like messing with advanced options to make those things easier either (outside of quick combat animations or making things tougher like raging barbarians).
My current Emperor game (although it is coming down to another 'grab the CSes and declare war so I can't gain influence' approach by the diplo AI) is actually playing out interestingly, and gives a window into the way some of the new diplomatic options are presumably supposed to work. I was ahead in points for most of the game, which left me largely unmolested, although Japan became belligerent in a successful attempt to grab my ally Kuala Lumpur.
I've had wars declared, peace declared on sensible terms and relations developing with those empires based on my other relationships. I've had relationships with Polynesia, Mongolia, Arabia and Egypt reinforced by declarations of friendship with one shared by the other civs.
I've had relations with Egypt further improved by denouncing Japan.
I've been able to keep Japan off my back while I built peaceful improvements by forming defensive pacts with Mongolia and Polynesia.
I've had denouncements against me which have strained my previously friendly relations with other states, and that (and possibly also my conquest of Ragusa - the Indians distrust me because they "think I'm a warmonger", very appropriately for Gandhi, but I'm not sure if that refers to the denouncement or the CS conquest - the only war I've started) led to first refusals to renew declarations of friendship, and subsequently cascades of denouncements by Arabia, India and Polynesia (both of whom were friendly with Arabia).
I've even had, for the first time I've seen, a very entertaining message from al-Rashid: "Anyone who has issues with you is worth getting along with. Give my regards to Japan" (it's a shame you don't get the option to respond with anything pithier than "You'll pay for this in time" to these varied and entertaining messages, which add a lot of character relative to Civ IV).
Arabia declared war on me prompted by my acquisition of Tyre as an ally, Arabia themselves having been accumulating CS allies (India, the other power with whom my relations seem most strained, also appears to be trying to win favour with city-states).
I don't know if it makes a difference that I'm playing with a 'standard' map, while my previous games have tended to be on smaller ones (not by choice, I set map size to random - in all Civ games I've always liked finding out how many civs I share the planet with rather than setting it at the start), and therefore with wider scope for interactions between civs, but this is far superior diplomatic play to most I've encountered so far in Civ V.
What emerges is the core of a diplomatic system that has the potential to be as rounded and sensible as it looks on paper - wars are declared when it makes sense for the other civ to do so (to capture a city-state, attempt to capture a resource, or as a result of tension between powers seeking the same objectives), peace declared on a similar basis and future relations dependent more on your later behaviour towards a civ than whether you were previously enemies (indeed 'we were previously at war, but they don't seem to hold it against us' is displayed as a neutral - white - tooltip), and relations overall heavily influenced by who's friends with who, who's enemies with who, who's defending who and so forth. The civs that remain moderately friendly with me - Denmark and Mongolia, and perhaps also Egypt - all appear to be ones that either have no relationship with or are distrustful of those that have denounced me.
If the AI could work like this all the time, it would be well on the way to presenting a superior - or at least more engaging - diplomatic system to Civ IV, and certainly to the three earlier Civ games. I think there would still be issues to fix - war probably should have some immediate negative effects, while everyone I've gone to war with seems to have got over it quickly, and probably more negative effects depending on the outcome of the war (for example the Mongols just attacked me and lost an army - in the war with Japan I razed one of their new cities. And while my relations with Japan are not good, they don't seem bothered by the war any more than the Mongols were). Denouncements have the potential to lead to a cascade of denouncements with affects relations with everyone and for longer and longer periods as additional nations denounce you. I don't know if there is a buffer that reduces the effects of denouncements on civs that are friendly with you (anecdotally there seems to be, but it may not be strong) or less friendly towards the denouncer, but if not there probably should be.