If you're beating up on the AI already, and can't hold out until Pocus has time to optimize it further, the first option you should look at isn't the difficulty level, it's the AIs fog of war settings. I know, I don't mucy like an AI that cheats, but increasing this setting just a single notch seems to produce a much more aggressive AI. I get the feeling that the regular AI is too easily intimidated by regions it can't see. That might be why (As the South) taking Lexington, Cairo, and Louisville means a near complete cession of Union activity in the west. If you decrease the FOW a bit for the AI, it becomes more aggressive and tries to retake the areas rather than just sitting back and building forces.
I just tried this, and despite having beta tested since they released the first code for this, I'm currently getting whipped. I tried my usual routine of taking Kentucky out, but instead of limiting the US forces to Cincinnati and St. Louis, I've now been pushed back, completely out of Kentucky, and in the process, lost every bit of one army aside from a lone artillery unit that somehow managed to escape. So, if you're looking for a bigger challenge, and don't have someone to PBEM, give that setting a shot, I never really thought about it before, but it has made quite a difference for me so far.