Current strategic thinking at Poly is coming up with the despotic whip being core to the most efficient way to beat Deity. On Deity, the AI gets an ungodly -40% bonus to everything, so the player has to catch up somehow. That whip is the way, population rush-building is WAY too powerful as it stands. 40 shields for one pop? Damn, that's efficient, esp in the early game. The best application I've seen so far is with Religious civs. Use your second pop to rush a temple (it'll cost one citizen) and the temple will cure the unhappiness caused by its own rushing and get you the culture that much faster.
"Glitches" in game design meaning "feels like a rush job"? Well the first big CivIII patch is due sometime this week, so you should probably get that before you write anything.
As for that Indian attack, the AI_declareWar() function doesn't discern between human and AI players, so you must have had some weakness it was trying to get at - most likely what it saw as inefficient military relative to the goodies it could pry off you.