The subject of the AI in TMO (in general) is one of those things that has gone off and assumed a life of its own. No matter what i do with it, somebody will be upset with me. However, my spidey sense tells me, most people are fine with it, and would be disappointed if it was anything else instead of what it currently is. So at this point, I don't dare touch it anymore then I already have.
Besides, as cited in the PDF that hardly anyone reads, TMO defines realism by player behavior. Is the player having the same worries and fears as a real sub captain would? One thing to remember is these sims are environment's that are repetitious and hard fixed to work within measured parameters. Once you know what those boundries are, the game will become dull.
Evading the AI is like threading a needle. How hard it is depends on how small the eye of the needle is. All the AI settings in TMO do, is make the eye of the needle smaller, so it is much harder to thread. With practice, even this added challenge will become dull and mundane.
EDIT:
And for the record, when I tuned the AI, i specifically tuned it to not be what i refer to as "Atlantic Hard". In some ways i almost wish i was modding for the ATO, as i could have had free license to go full tilt instead of holding back.