Have you looked into influence maps?
Here is a good read.
http://gameschoolgems.blogspot.com/2009/12/influence-maps-i.html
mOOnpunk thanks! I read most of it and will read the rest later. :)
At some point I might need to actually add some "weights" on how the AI thinks and moves based not only on HP, but other factors. For now having the AI move to and attack the lowest HP player unit is fine, but yeah taking into account how much damage they'll do, how much damage they'll receive in a counter attack, etc, is definitely imporant.
There is also one more important thing to consider however: the game shouldn't be impossible. In fact, the AI sometimes should do something we'd consider "stupid". If the AI knows and plans every single movement and attack perfectly, I don't think the player will have much chance to actually win. I'd imagine some of the game's audience could be new players to the genre as well...