So I'm sitting back and not trying very hard, never building anything more than light frigates, and seem to be able to whoop any number of AI in any scenario. I was thinking perhaps one of the skill levels was broken, so I went to go fiddle with it - I had it set to (E)xpert, so I cycled through to (M)edium and (H)ard and I was wondering why the heck there was no novice setting.... then it slowly dawned on me...
OK so a week passes, and now I'm playing on (H)ard (damnit!) and though I actually have to TRY, I am still whooping butt in all scenarios. I know the difficulties faced in programming a good non-cheating AI, so I'll chip in my two cents in regards to what *I* am doing that the AI doesn't seem to be.
(1) The AI's Situational Awareness is fairly messed up. If I send a small decoy fleet to one end of the AI's empire, engaging his capital ship, while I send my real fleet to the other end of his empire... actually capturing profitable planets, the AI seems reluctant to divert forces to the 'real' fight. The fight that matters.
similarly,
(2) The AI seems to fight just as hard for a dead asteroid as they do for a fully stocked terran planet. If I have reinforcements incoming that I think will turn the tide of the battle, I will retreat my currently engaged forces so that they may all fight together.
(3) I will often leave a 'bait planet' out in the open that the AI tries to tackle. Especially in early game when the AI doesn't seem to have any planetary-bombardment frigates, they will leave their fleet there trying to take out the planet (and my construction frigates) for 10, 20 minutes sometimes. This of course gives me ample distraction-free time to send my military units elsewhere or to build up a force to dislodge my opponent.
possibly the worst of the AI abilities,
(4) it's ability to make an educated guess on the outcome of a battle. I can usually glance at the battle and say - OK, we both have a Kol capital ship at full health, he has 22 light cobalts and I have 19 light cobalts. Time to retreat!.... The AI cannot make this decision when the tables are turned. The AI should do a simple "projected outcome" balancing the economic impact of the fight. The AI is PARTICULARLY bad at estimating it's chances of success against Valsari Missle Turrets (especially with several missle upgrades). If the AI comes out the loser, RETREAT and bolster the force with a few reinforcements and try again. If an OVERWHELMING force approaches, the AI retreats - but if it's a close fight it falters.
this is compounded because
(5) I focus-fire on the AI's capital ships first, causing severe economic impact. With even just 15+ light frigates joining cap ships in the fray, you can usually take them out before they retreat. Thanks to my surviviing capital ship's special abilities, I am able to take out the accompanying AI cobalts without taking too many losses. The AI rarely focus-fires on my cap ships, or if it does, I recognize it early enough to retreat my cap ship.
(6) Speaking of retreating cap ships, Once the enemy capship is dead I'm able to re-enter my damaged capship without fear of losing it. AI seems to rarely withdraw it's capships strategically; it either runs away, and STAYS away for quite some time, or it dies in my hands. The AI loses much too many capships and should be more willing to pull back, even if only for a few minutes (to escape my focus-fire).
(7) The AI doesn't seem to put much weight into economy. Most games like this I play the capitalistic way: make as much money as you possibly can, as fast as you can, because you can BUY anything else you need once you have the cash. I usually end my small one-star campaigns with nearly 200,000 bucks and nothing to spend it on. The cash reserve comes in handy though - in the heat of the battle, I'm able to churn out replacements for every ship I've lost from a planet one or two jumps away, essentially leaving the enemy fighting an invincible force. Looking at the allied AI players I sometimes have, they seem to spend every cent they have the first chance they can get. I like to keep enough in the bank (especially late-game) to entirely replace my fleet should it become destroyed.
because of the this lack of focus the AI has on economy,
(8) It seems every time I wipe out an AI fleet, I can count on not being disutrbed by that AI force again for 10-15 minutes. Immediately I'll round up all my forces on that end of the star system and move it to the other border, where I can feel safe in knowing the next attack (from another AI I had previously defeated) will come next. I am essentially able to 'turtle' with a single defensive fleet across a star system.
(9) AI has a habit of hanging out in my border systems, where I invariably have several defensive structures, instead of moving *just one jump farther in* to the jucier planets with no defensive structures. They scout them all the time (I ignore scout ships) so they *KNOW* there's a big prize ripe for the taking, but they seem bull-headed and unwilling to move forward unless they can take out my 6 missile turrets and 3 squadron hangars first. *rolls eyes*
Hopefully that'll help the devs make the AI a tiny bit harder

Right now I'm satisfying myself by simply making the teams 4-on-2 and trying to keep my teammate alive (usually by feeding him cash regularly); so I am still having a lot of fun with the game and love it to bits.