I suggest you should play on hard or medium campaign difficulty with 1.2 because its much more logical and fun, atm at medium difficulty i have a very enjoyable campaign wit the right mix of backstabbing. Also if you like i can attach a modified campaign ai xml for passive pope, because it seems that with 1.2 usually he goes really crazy
edit:OK here are the attachments, the campaign script archive is about adding the army upkeep cost script from DLV to LTC