It's ok to argue what tastes better, vanilla or chocolate, because that is purely opinion. Thats flavor. AI settling far away is bad. It's 1) unrealistic 2) hurts the AI (can't defend itself) 3) ruins the look of the map. I may be biased, but I would go with the "settles closer to home camp" If its that big a deal, maybe have two versions?
Ok so I have what I think is your second version. What I have seen: 1) AI is absolutely better. I won my war (Immortal) but it was not easy. AI actually kept 2 archers at home with walls so I needed like3:1 odds to win, just like an attacker IRL needs. Independant people were going nuts, I almost lost a city to them, as did another AI (city was down to a red sliver before they saved it) 2) AI is doing a better job settling. I have not seen an across the entire map city. I also have seen no idiotic 3 tiles away forward settling on players which I love. No words for how much I hate forward settling in any and all 4X games. AI has done a good job of founding cities, I was like "Damnit, they settled there, guess I'll take it and burn it...wait a minute...uh that spot is great, I couldn't do better, guess I'll keep it" 3) They are founding cities more quickly now, getting closer/hitting cap. It is absolutely an improvement.
The Bad: AI STILL won't use commanders. 1) I had a war where as mentioned above, they made units, they defended their cities, but their commander went for one of my cities alone, and just sat there. I feel this is going to need a Firaxis fix, like maybe rework commanders to be "ghosts" or something, like there, but they don't interact in any way with the world aside from buffing/transporting units. If they are a normal "unit" the AI is always going to be dumb with them. Maybe they will have the commander "attach" to a unit. 2) I had an enemy archer just stand there in the field. I had used my attacks on thier city and he COULD attack me but didn't I attacked him, ended turn, he didn't attack back, or run. Just stood there to die. This was one instance and has not been repeated.
Again, overall, big improvement. Good work. With an AI mod, a few good maps, at least 10 players in a game (still shocked 8 is the cap) religion rework, and a few other extras/tweaks we might actually have a good game here, much better than Civ 6.