1. No, whichever government marked "Default Type" is the default government. If you mark a government as "Transition Type" or "Default Type", these governments cannot have prerequisites, so all civs will have access to these governments. What you can do, is to mark Anarchy as both the Default, and the Transition. The next turn, civs will attempt to switch governments to whatever they have access to, such as their own unique governments, or any that they have techs for.
2. Yes, the AI will officially know a submarine is there, and therefore will not attempt to move there. But then that defeats the purpose of a submarine, reducing it to just stealth attack.
3. From what you described, probably, but you also cannot see units with your borders, and must have a unit to patrol to see them. Most people argue the AI's ability to play is already crippled, because they don't understand the concept of strength in numbers, offensive use of artillery, threat analysis for enemy units, and cost/benefit analysis for units and improvements, so this would only cripple them even more.
4. Armies are special units that take on the abilities of other units that are loaded in them, with 2/3 the movement. If you give a unit marked with worker actions, they may act as workers, yes, but thus cannot be built without a SW/GW building that allows Armies to build, or using a leader, if a leader has the ability to build Army (specify in the General tab). Also, Armies, when they are captured with no attack/defense values with nothing in them, are destroyed.
5. A Palace is the building that is marked "Center of Empire", and runs into problems if it is not an Improvement. Free buildings do not cost maintenance, as such will defeat the purpose of "free". Please see
Da Rules where I detailed out what each option does, but do not make mention of tips and tricks with them, as that can easily triple the length, and are often better described in specific threads.
6. If you specify custom Player Data, and specify a player to not be Human, and then give that player a unique tech, you can do that. Otherwise, no, the only difference between an AI and a Human Player is that the AI makes more questionable decisions, knows where all the resources are on the map without the techs (though may not be able to use them), and can do certain actions despite not having the box fully allowed (sacrifice workers without the sacrifice box checked for example)