Ulm with Water Cult? I don't think that'd be very good, since Ulm is designed to take 3 degrees of drain without having an effect because of the smiths, and water cult requires at least 1 magic scale.
BTW, why only Ulm and Jotunheim? Don't all races have access to water cult?
Basic Ulm with watercult would not be a good idea since they lack sacred units. Scuba Marignon is a lot more scary. Drive by priesting is though without them storming the beaches. Cheap massable flagellants and though knights of the chalice can take on atlantis and R'lyeh if they have a good blesseffect backing them. Not to mention what submarine inquisition can do in a dominion push strategy.
I find it difficult to rate the AI without discussing the purpose of it.
As a standalone single player experience its one rating.
As a prelude to MP its certainly another.
I also find that even when we talk about a better AI we might not talk about the same.
there is alot differense in wanting it to presure you more in the begining, be cheating, using different strategies or even be more MP like.
First scuba gear appears at construction 2. Shamblers Skin (1w) and amulet of breathing (1a) One man gear but enough to send a group of competent commanders into the deep. At construction 4 the first group scuba gear appear. At 6 comes the submariners and at 8 the fabled "Orb of Atlantis" that essentially lets you take on water nations as an equal.