Does the intermediate AI cheat?

Solution 1:

Unfortunately there is no Red Post on the following forum thread, but it pretty much describes the different apparent "cheats" that happen on this game mode.
http://na.leagueoflegends.com/board/showthread.php?t=1124284

As Raven Dreamer stated, they get items on a scheduled basis, whether or not they have very low K/D ratio, this is one of the principal facts of making Coop. vs Ai more challenging that the actual custom games.

Solution 2:

All bots cheat, they receive items on a pre-determined schedule according to their level, regardless of their farm. Their farmed gold is mostly meaningless to them. The trick is zone them and make them under-leveled, so they don't receive their pre-set items.