Kingdom creation is part of the main quest. After forming your kingdom (or joining one of the others), the next quest is to defeat every faction in the game (they surrender when they have lost a certain amount of land). After that you are done with the main quest.
I think the timer stops when you choose a side to support. Problem with that is that the conspiracy timer starts ticking and when that finishes, all empire or non-empire factions become allies and declare war on your faction. So there is still a time limit sort of. Correct me if I'm wrong though since I haven't played the main quest since the change.
For me the AI is currently way worse than Warband. They barely block at all and there are more ways to cheese them compared to Warband.
Maybe they do have something else in mind, but how are we to know when there is no communication from them at all? All we know is the current state of the game and we have to form our feedback around that. Speculating about what the developers may or may not intend for the game is useless.
Well what I meant was the difference between the two are "staggering" as in "shocking". But you have a point as well since the AI stopped blocking attacks in 1.1.0. Hopefully that is just a bug that will be fixed soon.