I hosted several co-op missions this evening with my squad-mates and can confirm that the host (in this case myself) controls AI behavior, and having this mod on the host's machine guarantees all players see the same AI performance as the host. No need for the clients to have the mod installed.
Several of the missions I hosted had medium bombers (A-20's and B-25's, all AI) in them, all of them took off, flew, attacked and landed without incident. Haven't had any missions yet with heavies in them however (using a DCG generated Italy '43/'44 campaign).
The AI fighters are quite aggressive, one AI Spitfire I was watching pressed several attacks after his engine had been damaged and was smoking thickly. That in itself is a great change over stock AI performance (they would usually fly straight and level out of the combat area if slightly damaged).
The AI now make ample use of vertical maneuvers instead of that cursed roll, almost too much... I saw several go into very steep dives and extreme climbs when it wasn't really necessary for them to do so. The AI aggressiveness can be a double-edges sword however. They tend to flock onto targets and get a bit careless if other friendly AI -or human- are around. "Shoulder-shooting" was rampant.
On the plus side ... the AI can shoot now. They still haven't mastered leading a turning target, but their shooting from a slight deflection is much better. Conversely their extreme deflection shooting (snap-shots at a crossing target) seems just as good as it ever was. Engine shots and pilot kills from that type of shooting were at about the same level as before. In my campaign AI Spits were having a field day downing AI MC-202 XII's, leaving us human P-38 drivers with little to do but watch the fun and hope for scraps.
Haven't noticed any issues or conflicts with other mods, however the AI nav lights being on at all times during darkness was mentioned earlier in this thread.
One curious incident occurred during a QMBPlus mission on the Slovakia map ... an AI Spitfire MkI came in for a landing and flared ... then went up about 20 meters and then did a nice -if steep- 3-point landing. Any human flown plane doing that would have ripped the entire undercarriage off the plane.
Short version: I am very impressed with this mod. This one little mod will make a very visible and dramatic *positive* change in how folks play both single-player campaigns and multi-player co-op missions. Old-timer IL-2 pilots will have to re-learn combating the AI all over again, which makes this entire sim new all over again. Two thumbs up!