If you watch Maddjinn's LPs, you will see that the AI is able to do all the things that you need to do in a civ game. The AI is able to expand and place cities in reasonably good locations. The AI is able to build useful buildings including wonders. The AI is able to improve tiles. The AI is able to conquer other cities (We saw Brasilia take out the KP as well as take several cities from the Slavic Federation. And the AI is able to win a non-domination victory in less than 300 turns on Apollo. The reason the AI looks so bad is not because it can't play the game (it can) but because it can't play the game as well as a human.