Personally I would really just like to do away with the idea of Global Happiness and move towards localized happiness plus city maintenance. Not only could the AI handle it about 50 times better, it would be much more effective at stopping ICS than just about everything else.
I don't think this is a good idea for this mod.
Global happiness is I think a good concept, not a fundamentally broken one.
I no longer really read General Discussions forum because it is full of people constantly complaining about the global happiness mechanism and 1upt.
Those aren't going to change.
City-based happiness in previous Civs was terrible. It meant that happiness was utterly useless in every city unless you were exactly at the local happiness cap. Health was similarly messed up, in that the marginal benefit of excess health was zero.
Global happiness is a very nice system because:
a) It only needs to look for a constraint at an empire-wide level, rather than an individual level
b) It allows for smoother transitions, where excess happiness is beneficial.
Now, I'd be fine with doing things to tweak the system, like having graduated penalties for increasing levels of unhappiness, but otherwise I think the system is pretty good, and is pretty integral to the Civ5 design.
Alpaca still doesn't remove the mechanic, he just fudges it in a way that IMO is not very fun.
ICS has already been stopped with this mod. It is not a good strategy anymore, because the returns to buildings are so high.
I'm not convinced that AI would be better at a local happiness system, or at dealing with whatever global expansion mechanism you created to replace global happiness. And I'm certainly not convinced that abandoning global happiness would make the game more fun for the human player. Happiness in previous civs was stupid.