[Twan]

Hum as AI diplomacy has always been exploitable in any game having diplomacy IMHO it's useless to waste the time of someone "to prevent players finding exploits with the AI diplomacy". So not the best excuse.
For me the question for Dominions is more : is the SP game so hard that the player needs help from the AIs ?
As strategic AI is far from perfection, a diplomatic system allowing the player to make peace agreements and other deals has not to be made as it would be one more handicap for the AIs.

Now if AIs still works like St Patrik said ("AI only become aggressive when they notice that you are weak, or when you attack them", a good resume of dom2 AI) I think there is a flaw in the "diplomatic part of the strategic AI" that may be easy to correct with good effects on the SP game : make AIs attack not only a weaker player but the strongest one. I think it's very simple to implement : if a pretender is by large first in charts all neighbours should attack him instead of staying passive waiting for their turn. No need to make an alliance system for that, just make all the AIs aggressive against the potential winner once a critical power level is reached (usually by the player).