If the AI becomes smarter, they can do something they've never done before to my knowledge... Handicap the AI at lower difficulty levels; instead of the difficulty scaling with level of bonuses, low level AI would simply not use all the tactics available to them. And for higher level AI... Victory conditions actually become easier to achieve, as the AI will have less bonuses with which to rush religions/get GWAM/build spaceports. While still being just as hard - just more in the AI decisionmaking and less in the bonuses. Though I think you're right, a truly good AI would also mean that sometimes, the player just loses. He got outclassed, simple as that.