Yes, I've seen the AI use these improvements also.
Yes, but they sort of rarely use them. For example, say a planet is class 10 but has 15 tiles terraformable with the lowest of the mod's terraforming techs. A good AI would quickly build a tile, terraform one, and so on, provided the manufacturing is OK, until it quickly reaches class 25. But its behavior seems hard-coded in the game, expecting only a few tiles maximum out of terraforming techs.
In other words, it may well build up the 10 tiles, upgrade as much as possible, and THEN terraform one, upgrade it to the max, before moving on to the next. This puts the AI at a huge disadvantage compared with players who can visually plan the leap from say class 10 to class 25 and build accordingly.
Thus, until they update the code, this mod gives a huge advantage to the player.
Another thing I would like to see is increased building cost for each subsequent use of the same terraforming tech. Sort of makes sense that the more a planet gets built on, the more expensive it gets to add even more buildings. It would also make it less obvious to just spam 20 tiles and get a god planet.