I strongly recommend Stainless Steel, for many more reasons than just the diplomacy. However, the diplomacy in SS is a notable improvement over vanilla, and I've noticed the AI usually has a strong interest in self-preservation. There are also three settings for the AI possible, written by Gracul, Lusted, and Savage, each with a different level of aggression and playstyle.
From what I've played, I've found it to be a very polished mod, and find it to be a significant improvement over vanilla. The AI is far less predictable on the campaign map, and is smarter on the battle map.