I guess I should reword that since it's a bit misleading. I haven't done a whole lot to the AI code itself, but all trainers have the best AI now, with the exception of item usage and switch frequency. In that sense, the AI seems significantly improved for average trainers from the player's perspective. From the documentation: "Every trainer now has the smarter AI used by 'boss trainers' and their 25% chance to miss status moves has been removed, along with some bugs (see the 'Bug Fixes' section), and challenging trainers now switch and use items more often."
However, the AI itself has been improved a bit. For example, Solarbeam is now a favoured move with Sunny Day, the AI is more likely to use OHKO moves if your evasion has been lowered, it no longer uses status moves on a Substitute, lowering opposing Pokemon's stats significantly can cause the AI to switch Pokemon, all trainers swap out at a Perish count of 1, and the AI is more likely to switch Pokemon when at a type disadvantage or if it predicts that you'll make a switch that will lead to a type disadvantage.
As for Arthur's comment (idk why the Respond option doesn't quote), Chronosplit basically addressed it. The point of Ultimate is to remaster Crystal with a focus on balance and increased difficulty and some additional content, not to remake it. To me, adding the split is more remake territory, since that's basically a battle system overhaul. I want this hack to feel like you're playing the best possible rendition of the original gen 2 game. Besides, other gen 2 improvement hacks of a similar nature have already done the split (Polished being an obvious example), whereas I'm not aware of a gen 2 hack that has gone to significant lengths to tighten up the original battle system. I think it'd be really neat if fans of gen 2 started a niche multiplayer community for Ultimate, as I think it could make for an interesting and diverse meta. More interesting than a copy of the modern battle system at least, not that that's bad or anything.