It seems to me that the only difference in difficulty is that the AI gets buffs and you get nerfed. The AI doesn't act any less stupid.
I watched a ware between two ai in intermediate mode - one came and took two colony then retreated from the main colony. It was the Drengin! Mind you their fleet couldn't overcome the fleet stationed on the planet - but where are the rest of the Drengin ships? Why is the Drengin sending such a weak fleet? When the ai attacks me there is no such mercy. It seems the ai was intentionally nerfing itself to preserve that home system.