First of all, the unfair AI (and hard for that matter) do cheat for extra resources.  Second of all, they're opportunists.  It's not necessarily that they're timing their attacks, but rather waiting until your fleet is tied up to launch their attack.  Often times AI's will just sit right outside your borders waiting for your to move your defenders away before they attack, and another AI attacking your flank is just such an excuse.

The AI doesn't like to fight enemies that are strong enough to really hurt it, and will usually run away if it's outgunned (usually; it is known to do stupid things occasionally).  This explains attacking the weaker AI's and players.  However, they also tend to focus their attacks against one player if that player is winning the game.  Basically in earlier versions they would all sit cowering in their respective empires while you knocked them off one-by-one, but if you ever get that strong now the AI's will go into kamikaze mode and start ganging up on you to provide some level of challenge.

amazingly, destroying their homeworld has apparently no affect on how much they like you. all you have to do is give them some metal when they ask for it and go attack the guy they tell you to attack and they'll be your best friend forever.

so ya, basically the AI diplomacy system is psychotic and terrible and i never use it (locked teams setting disables it). good thing the second expansion pack is about Diplomacy.

The name kind of gives it away - the unfair level was a request by beta testers for a difficulty where the AI gets bonuses.  As for ganging up on you, that is probably due to opportunism and bad luck rather than hardcoded AI choices.

Yeah I remember playing vs unfair ai, those 3 minutes it had higher income then me were really tense But then my homeworld upgrade kicked in  and he never passed me in income for the rest of the game.  I guess AI really benefits from quickstart now