I have to say the AI is something that profoundly confuses me, I can't understand why it is even in the game.
Dragon Trail is a good example.
The final chicane is taken, almost entirely flat with you being required to totally cut the corners and fly over the kerbs. The AI when racing against them in arcade mode, don't do this at all. So, I do the track challenge thing, thinking it would be pretty easy and I could beat that sector split gold time by seconds. Only to find that the sector split, requires you to cut the corners... so what was the point in the AI 'race' ?
It doesn't really help you learn how to be a good driver because they are so comically slow you can just drive around them and it doesn't help you to be fast or learn how to over-take people, because they don't fight you and they don't know how to drive around the tracks...