I have seen the AI generate a leader and use to build an army.
Here's what happened: I landed a bunch of horsemen and pikemen next to his city. AI attacks and kills at least one pikemen, generating a leader. On my turn, there's an army in the city. I'm not sure, but I think there was only one unit in the army, and it was only a horseman. I attacked with one of my horsemen and was easily able to defeat it and take the city.
Caveat: This is the only time I have seen an army in action, so I could have misinterpreted what I saw. Maybe there was an empty army in the city and one other unit. I also don't remember seeing a message popping up saying that AI got a leader, but there were multiple attacks on my stack, and I could have missed it. (The AI was already at war with his neighbor, so the leader could have come from that.)
This brings up another question: is it ever possible for some, but not all, of the units an army to do. Say, if I load three units into an army, attack a difficult unit: the first unit fights until he has one 1 HP, the second unit fights until he has 1 HP, the third unit fights to the death and dies, the first unit fights again, killing the oppenent, leaving me with an army of two units? Or does the whole army die if the third unit is not successful?
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