I agree with Fjordan that a player who's played the early and mid-game well shouldn't be artificially penalized in the late game. The change player option's a good idea, though, to let a player decide to take on a new challenge.
If you do want the AC to be the mechanism for spicing up the later game and making it more difficult, then there are several things you could do:
-- Strengthening the horsemen has been mentioned. If you want to go that route, I like Magister's idea of giving them Blitz and Water Walking. The idea of having them spawn on or near the territory of the player with the highest score, or moving to attack that player, would be an equalizing mechanism, obviously. One problem with the horsemen is that the difficulty they cause is localized, so if it were possible to give them some kind of teleportation mechanism, allowing them to show up in different parts of the globe each turn, that might be more balanced.
Again, if you do want to strengthen them, you could consider giving them Medic I or Medic II. It might be thematically appropriate to give them Death I with Summoning and no limits, so they could raise an army of skeletons once they show up.
I also like Xienwolf's idea of having the earlier horsemen (if they've been killed) re-spawn when the later horsemen show up. You could expand this so that all four re-spawn when the Avatar of Wrath arrives. If you decide to have them re-spawn with other horsemen, then they'll have to appear in different areas of the map, for balance reasons.
-- Wrath. In general, I think the Wrath event can be strengthened to spice up the late game. As it stands now, a few of your units go barbarian each turn and you kill them with other units. I understand that if you went back to the earlier Wrath mechanism, where units became barbarian right away and teleported to the Avatar's location so the Avatar started out with a large army, it would be unbalancing because it would disproportionately affect the civs nearest to the Avatar.
What I would suggest is, instead of having units become Crazed when the Avatar arrives, have those units go barbarian right away but remain in their locations rather than being teleported to the Avatar's location. This way, Wrath would result in hordes of barbarians showing up all over the world and would cause problems worldwide, which I think would be thematically proper.
-- Other AC ideas. WAR: You could consider increasing the chance that good civs will declare war on evil civs, and vice versa, as the AC rises. Also, increasing the chance that both good and evil civs will declare war on neutral civs, since both should be upset that neutral civs won't take a side, right?
VASSAL STATES: the Vassal State mechanism seems to be unmodded from the BtS mechanism, i.e., a vassal can't break away from its master unless it has a certain percentage of the master's population and land and a certain percentage of its own original territory. Is there any way of modifying this for vassals whose alignment and/or religion differs from that of its master? I was thinking you could have the required percentages decrease as the AC increases. So, for example, an evil vassal to a good master would be able to break free at a lower percentage of land and population as the AC rose. I would compound this by having the vassal declare war on its former master (or vice versa) as part of breaking free.
I think something like this could make the late game interesting, especially if combined with an increased chance of war between civs of differing alignments. You'd have vassals revolting against their masters, civs all over the place declaring war on each other, etc.
Just some thoughts.