I don't understand. I always play noble without that dumb option and to me the AI seems to know how to build more advanced units. I just got raped by crusade + mith champions Bannor. My poor vampires did not stand a chance since I only had access to bronze. Oh he had paladins too and when I looked in wb, at least some phalanx in production.
Wait, that was a FF game. Maybe they have better AI.
But sure enough the AI knows how to build advanced units, even in base FfH. In my Illian game Alexis went after Hannah with vampires, phalanxes etc while Hannah responded with a huge number of arquebusiers. Hannah did not stand a chance. This game was completely unmodified FfH 2 0.34 f.