They do need to make other choices viable.  They need to overhaul how diplomacy works, but I don't think increasing the cost of military is the way to do it.  

The A.I. plays to win and it won. That's great. Why would it change its strategy if it can win with the current one?

This is not true. The Spell of Making is a good example of a non-military path to victory.

The military is not the only viable option. Magic in this game is so powerful that the game can be won with just the Mage Sovereign and a couple of Mage Champions. They'll grind countless stacks of doom into dust.

Diplomacy is the art of convincing the other guy that your club is bigger.

You should try playing a game WITHOUT stacks of doom, and see how you like it.  For some reason, in my games I have yet to see the AI launch a really impressive attack.  They'll declare war, maybe send some raiding parties my way, but I can just go about my business until I'm ready to steamroll them.  I WISH there were stacks of doom.

its 9 for an attacking army, but defending armies can have 9+city defense.  The problem with defense is, you really can't recover from anything in this game.  By that I mean, the outcome of a war is often determined before the first battle.  Very Sun Tzu really.  If you are not prepared when the enemy attacks, it's pretty doubtful that you will be able to build an army to fight off your attackers.  In 20 turns of combat, the enemy could wipe out your entire faction.  In 20 turns, how many new troops can you field into battle?  It may sound as if I am describing this as a problem, but  in actually, I consider this a strength of the game. The world is filled with people who want to rule it, be prepared.  “War is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected.”  

I would love to see  "Survive for X turns" option.

I tend to like "turtling" but it's  terrible strategy in a game where the AI is just going to steamroll you with the stacks of doom.

And virtually every RTS game ever made usually demands you zerg the AI before he zergs you. I don't find that fun in the least, but I will admit FE doesn't do it as "in your face" as other RTS's.

In FE you don't have to zerg anyone. The moment an enemy army enters your territory, they're at the mercy of your global spells. Any stack of doom can be reduced to dodgeless, defenseless, half-dead collection of free XP (which I might add needs to be upped a bit) ready to be crushed before the tactical battle even begins. To accomplish that you of course need Mana, competent mages and some research into the magic tree. That's provided that you're not playing a race that can simply outbash your enemies. FE is a game you can lose, and that's awesome. Enemies won't stay their hand until it's convenient for you to fight them, they'll press their advantage when they think they can win. If you aren't ready, you deserve to get crushed.

Seriously, though - what settings are you guys playing on?  I don't ever see a proper stack of doom, the AI is very unimpressive in my Challenging games.  Do I need to boost AI up to something more... Ridiculous?

As an aside: Although yeah I think Diplomacy is lacking, I actually really love the "Influence" concept.  Instead of just blindly guessing how many cookies an AI wants before it will give you X, it just neatly rationalizes and commoditizes the whole process.

Well, I do plan ahead as much as I can. In my last game, I built up as large of an army for each city that my economy/resources would allow. The game rated them as "epic" strength. Nonetheless, the AI had wave after wave of epic stacks of it's own that eventually beat me. 3 epic armies against (what appeared to be) an endless stream of epic armies. Well the outcome as you said is obvious. Kind of reminded me of the video games from the 80's where the opponents just kept on coming and coming endlessly until you lost your three lives and had to feed it another quarter.

I still say the cost of maintaining an army should be adjusted, so that the AI has to make some hard choices.

I really don't think a change to the cost of maintenance needs to be made (I would actually argue that they need to be cheaper).  You might need to adjust your strategy.  Remember, it is a 4x game, don't ignore Exploring for and exploiting resources, items, quest, exp.  Don't ignore expansion.  Early with pioneers.  You can gain a pretty high score just from having a lot of cities.  Also, Know Your Enemy.  From what I have noticed, the AI doesn't seem to build great troops.  Having one early fortress that can produce troops with a lot of bonuses can help.  And a lot of cities that produce money to pay their wages too.  On Challenging, you have the same choices to make as the AI.

The only issue I had with the OP is the title .

That said, if you play in a world where atleast 1 opponent is a warmonger, you will HAVE to build defenses, I like the point in FE that you gain a huge advantage of being prepared for a war, instead of being able to out-spew out-produce everything, and ignore military until the last minute defenses are needed (Civ 5 springs to mind)

That said, I think 3 out of 4 victory conditions right now are pretty "simple"/"easy" to grab, both magic victory (which is basically economy due to the heavy costs), and military victory doesn't require too much...

The master quest require you to have some army which could usually shatter a couple of empires anyways, but at least it might be a quicker way to end the game.
I would like to try the master-quest if it was changed to something like: There are 25 artefacts needed recovered, and if an opponent have 2-3, you will have to grab them from them, either by stealing, conquering or trading. of course you cant steal or trade items so this would be a quite massive change to mechanics, there would also need to be some way to figure out how many of these artefacts your opponents have (even in the current masterquest In my Opinion), so you know how close the bastard is to victory, and would still require for you to defend your cities for the last part of the quest when warmongers notice you being close to re constructing the rod of domination.

The current issue I notice is the lack of "proper" diplomacy with empires and kingdoms, I have very special tastes and might always be disappointed due to having a rather unique point of view on this, but I would love if it would be easier to find allies (I play on rather hard settings, so the enemies basically dislike you for not having 3000 empire points by turn 50...
Impossible to find "Friends" in a world like that.

Sincerely
~ Kongdej

I thought "stacks of doom" meant where the Player builds one or two overpowered armies and proceeds to mop up the entire map with them.

Not the AI building competitive armies (for a change) and taking on the player on equal terms.

I don't have problems with the implementation of stacks in the game. As stated above their is plenty way of dealing with them:

- Freeze, Tremors, Pillars of Flame, Tidal waves and such

- Defense ready up for a triple siege ( blizzard scrolls, mages, elite units, summons + city defense).

My only problem with the stacking system is when I'm at war with one AI and I signed a non aggression pact wiht another one. I have witnessed the AI stack a group of enemy units under a friendly AI caravan and I just couldn't attack them, which was VERY annoying. Maybe something to look up, i.e making it possible to attack an enemy stack of units independently from another friendly unit that is on the same tile.

I think everybody agrees that the diplomacy side of things could be improved. Though i don't understand why so many complaints about the different victory conditions, they are all viable imo, although mastery quest usually takes too long and the final battle is too easy.