As you can quite clearly see, all the AI does is check for conditions and react too it. In fact, civ4's AI has to ignore the unit visibility rules to act intelligently because it can't articulate that if it just saw a unit it's still nearby... if it sees something in one turn (or even part of it's turn) but not the next, as far as the AI is concerned the unit never existed. It will never approach a human's intelligence, at least not until we have quantum computers.
I think that's the second time you've mentioned quantum computers. I know this is off the topic of the present discussion, but why do you say it? Is it sort of an assumption of advancement of algorithm knowledge once such computers are common, or are you talking about a specific problem that they can solve efficiently?
By the way, I don't even know what you two are arguing anymore.