The problem isn't AI. It's that diplomacy trumps game balance. Better AI might make the experience better for those who have opted to continue playing when others quit but that does not solve the more fundamental problem of maintaining a reasonably balanced game throughout the life of the game.
Game balance is essential. There has to be some chance of victory for a game to hold players' interest. It's fine for diplomacy to tilt the odds but not if it creates a no-win situation. In sports, teams play with with one or two players benched. But there's a limit to how far you can shift the odds before it becomes hopeless. I don't know exactly what that point is in NP but I suspect it's around 3:1.
The deterministic nature of NP's combat system means that, at some point, numbers beat strategy. Given that, I would argue there should be more disincentive to creating large alliances when there's no potential counter-alliance.
A game that does not ensure a reasonable degree of fairness will have a hard time maintaining player interest over time.