I think they are a little too rotation-happy. Sometimes it is best to let a low-health unit tank/deal damage, as they would have been deadweight anyway even if retreated. I found that the AI didn't attack my cities when they could because they were too busy switching out the 75% health units that my archer attacked. But as you said, having a good AI and 1UPT is not mutually exclusive. I enjoyed the Community Balance Patch a lot, and I imagine if they can implement it right, beating the AI will feel much more rewarding than in Civ IV.