Simon- Your opinion is not the law of the land. I tend to think the AI is great after 1.06. I don't think I'm delusional for having my own opinion.
I'm curious, do you play any other racing games other than GT? I'm just trying to gauge the criteria with which you judge the AI. I have yet to play ANY racing game where I would rate the AI as 'great'. But compared to other games, GT certainly wouldn't be near the top of the list. Although, as ironic as it may be, I think the best AI I've ever experienced is in Superstars of V8 Racing and V8 Racing:NC, games which fell flat in many other areas. But the AI was, at times, brilliant. And certainly challenging.
I have several issues with the AI in GT5:
1. As racing drivers, they're simply inept. They brake much too early, they often miss the apex, they rarely, if ever, LATE brake, they often close the door on you when it's much too late. They're a bunch of rank amateurs.
2. They really don't seem to be having a race on their own. They seem programed NOT to actually drive quickly and win the race but to do whatever it takes to make you fail. If you're coming with good speed around an apex, they'll suddenly turn turtle slow in front of you, forcing you to brake. (OK, real drivers could do this too, but not all of them, all the time). If you brake early, they'll suddenly find their footing and accelerate early and hard.
3. They're simply slow. Ridiculously slow. It makes no sense that you have to use a car that has unequal tires or much less power in order to have a fair race. Because if you select One Make Race, within a lap or two, they're far, far behind. Even in Arcade mode on the hardest setting, they're just not fast enough to offer any competition.