The AI in gold will launch attacks to take back it's own cities that you've captured, or they might capture an undefended city in a raid, but they won't go after cities controlled by other AIs or cities you've taken from other AIs.
As far as cheating, we're doing everything we can to ensure the AI is playing with the same rules as the player. You'll actually be able to track the general progress of the other AIs in the new graphs window so that you can see how you're doing compared to them in terms of resources, military and infrastructure.
Regarding the fog of war, I'll admit this is a bit of a special case for the AI. Unfortunately, it would be too expensive to track fog of war for all the AIs with the same detail as the player. However, unlike people who can quickly spot an enemy across the entire map, the AI is only aware of what we tell them too look at and we can approximate their fog of war by limiting that range to the vicinity of their units.
And with generals, the AI in Rome will use them the same way the player will. Technically, the AI in Gold can use their Generals but I'll admit it isn't working as well as it should. Some of this was on purpose as AI generals have perma-death we didn't want them to throw them away on nothing, but I expect there also may be a bug or two. Unfortunately, AI changes are prone to unforeseen side effects and so we decided to work on improving this in Rome rather than making further changes to Gold.