The AI definitely surrenders too early now!
I was playing a free for all against 5 AI (FFA), a mix of hard and normal. I allied with a Hard AI, and was battling two normal AI on two fronts, when I discovered that two of the AI (one of the normal AI I was fighting and one hard AI on the far side of the system) had surrendered (or considered themselves defeated) -- broken glass in the diplomacy screen, no longer available for alliances, no longer allowed as a pirate target. Each controlled multiple planets and had a small but respectable fleet, with multiple cap ships left.
The game went on as there were two other "live" AI's. But both of the surrendered AI's could still have been factors had they not surrendered. One had requested an alliance with me shortly before surrendering, and I was considering breaking my alliance with the Hard AI to team up against them with one of the weak normal AI's. Although the "surrendered" AI's still had planets and ships and would fight if attacked, they stopped spending credits, building ships, etc., and could not form alliances any more.
Whatever the frustrations with the AI not surrendering until the last contruction frigate was dead when it was the last opponent in a game (and I never really minded it), it makes no sense for a live AI with planets and a fleet to surrender/die when the game is continuing with other AIs anyway, and it could fight on. In Civ IV, an opponent continued until its last city was taken, and I would prefer that for the AI also (especially compared to the current premature surrender). Having an AI surrender when the game is not over, is just frustrating and takes away options for the human player, and at least when the losing AI is not the last surviving AI in the game, should never happen.
When it is the last surviving AI, I would still prefer it to continue to fight all out unitl I destroyed its last planet, but at least there I can see that some others might disagree. IMHO the cure is far, far worse than the original problem.