My honest thoughts on GT Sport's AI (if it will be anything similar in GT7), would be that in the Arcade Modes, I usually set them to Professional difficulty without any boost, perhaps their best form so far to say the least. I always put myself in dead last (from a standing start) so at least I have a challenge to overtake them all in as quickly as possible.
When you start from dead last, and if the race is at a standing start, it feels like you have to carefully anticipate their movements as you make your way from the back of the pack, so that you don't crash into them, or get run off the road. They do have a bit of stalling and/or brake-checking behaviors, and they seem to be using their indicators too. At least that's their sense of aggression, and sometimes they'll clip in between your car if need be.
(On Blue Moon Bay, when I grind using the Porsche 911 GT3 RS, I can feel the LaFerrari or Bugatti Veyron behind me breathing down my neck, and trying to ram me.)
I tried a three-lap Nurburgring Gr. 3 race using the Audi R8 LMS and this is how I observed it: they're only quite competitive during the start of the race, but anything later than that, they get so far behind that they can't even keep up. Once you're completely in front and have no one to take care of, you can start doing significantly faster laps as anyone would at that point.
In fact, I was lucky enough to overtake that last BMW M6 GT3 to actually overtake everyone on the first lap. But on any ordinary try, it will be a bit of a challenge to try and overtake everyone on the first lap considering their patterns and predictability.
Added bonus: When you drive the wrong way and you're surrounded by them, at least they're aware of you and will slow down and try to dodge your car.
They are, and even if they offered a difficulty slider, it's incredibly likely knowing Polyphony that they would simply increase the speed of the AI and make it 'hard' that way instead of spending any time in making an AI that has some sort of fight.
That's simply not enough though, one suggestion would be that they should use various tire compounds, or the same tire compound as you (don't restrict them to hards or mediums), and that they should have different pitting patterns and behaviors, so they're more unpredictable and
actually have a strategy.
I'm not saying that they shouldn't step up their AI game, I mean it's good to keep them competitive, but not too hard, but also not too generous. Compared to Forza's AI, I think Gran Turismo's AI are trying to play it safe to encourage clean driving.
Well, Forza's AI can be quite reckless and a testament to the dangerous driving seen, especially online, or perhaps even the wonky collision physics, plus with the lack of space they give on the track, or sudden aggressive tactics (their AI system uses Drivatars which study players' behaviors and implement them on AI drivers), or worse (especially in the Xbox 360 days), messing with the rewind system could cause them to deliberately make mistakes with devastating consequences (be it failing to slow down in time and either running off the track, with so much time lost, or crashing so badly to the point of almost no return).