Those game mechanics sound broken, and should be fixed. The AI isn't broken for not exploiting the mechanics. I'm slightly disappointed the AI doesn't detect those optimal strategies dynamically and use them, but only because I have a high opinion of GalCiv AI from the OS/2 days.
You're right about the mechanics, but the stardock devs are either incompetent or too arrogant to admit they are wrong.
The "all X" strategy was the optimal strategy since the beginning, and countless patches + 3 expansions later nothing changed (they did nerf it very slightly by making it slightly less efficient, but not enough to matter), and the AI was never changed to take advantage of it.
They actually did change combat around a little, it used to be (iirc) the attacker always fired first... which made "all weapons" ships even more powerful. All they'd have to do is make it random who wins a tie (or just let both ships die) which seems like a trivial change... but nope.
As for it being an exploit, I disagree. You're following all the rules of the game to their logical conclusion. It would be an exploit if, for example, level 2 factories were supposed to make 10 hammers and they made 1000 due to a bug... so you purposely built a ton of level 2 factories and never upgraded them. But I guess, what's an exploit and what is not is a very grey area.
I had this conversation with a good friend of mine who is a programmer at a well known computer game company specialising in FPS games.
He said that the problem wasn't making AI good, it was that when it becomes too good the player just thinks it's cheating. They experimented with 'amazing' AI and had to purposefully let the player win. This isn't about the computer having amazing aiming - lets say you've got 6 bad guys coming up on you (a standard action game scenario), if they all took flanking positions, shot at you from cover, and oppressively moved forward - you'd really, really struggle even if they were being a bit stormtroopery
To counteract this, you have to make the AI basically stupid or the player really strong - however if the player is really strong, they found that s/he just didn't realise what the AI was doing (or that it was impressive) as they could just dive into them and blast them to bits. Even if they really paid attention, the fact that they weren't really suffering made the AI seem pathetic.
I do think that 4x AI has no excuse though - it just seems lazy programming a lot of the time.
Your friend is absolutely 100% correct for FPS games, or any other game that requires heavy "twitch" skills. The computer can react 100 times before you even realize there's a situation to react to, and it never makes mistakes or misses, and has no problem coordinating dozens or hundreds of units all doing different tasks. That easily offsets any disadvantage it might have for being unable to innovate or adapt to the situation. FPS games either let the player "cheat" (AI dies in 1 - 2 bullets, player soaks up 100's of bullets with regenerating health) or the AI does literally just let him win sometimes.
However, strategy games are a completely different thing. Computers are very bad at that sort of thing, and humans are very good at it. Giving the human a chance to use his big, impressive, creative (but slow) brain dooms the AI, unless they make the game so horribly complicated the human can't (or won't) properly manage things (and most people wouldn't enjoy a game like that). Even the current state of AI which is, honestly, usually pretty pathetic without cheats is not easy to make and to create an AI that's actually "good" at a strategy game without cheating would pretty much require you to create a strong AI.