After playing Civ 1 forever, I've finally gotten Civ II (MGE) and am on my 6th game (Emperor). The AI is pretty good, but i agree - it's not very loyal. However, I have had pretty good success in maintining relations with my neighbors; sometimes it's hard (or impossible) to repair bad relations, but I've had good results keeping the peace by doing what China does in the real world: be "friendly" with the most powerful, then trade technology like crazy with our enemies as a broad, stabilizing deterrent.
That being said, i generally follow a policy of scrupiously keeping my word, but being merciless against those who sneak attack me; one they do that, I never trust them again, and never stop until they're erased from the map. I agree with "Old n Slow" but I have less hassles using commmunism and can still make an advance in 6 turns or less.
It takes me a long time to build to world power because I build TONS of cities, but no aqueducts until after my borders are secure. the payoff is the same overall production, but loosing even several cities has little effect on my overall performance because each one, in and of itself, only represents a fraction of my total production.
Delenda Carthago (Death to Carthage)!!