Solved

Why is the AI so overpowered?

Why?

I join a race to play to try and undercut or to overcut someone on pitstops, use the right push strategy at the right time, boost when its need to defend or to attack.

Players who don't bother joining the AI just out plays you everytime, wins everytime.

AI shouldn't be allowed to use boost fullstop.

If you mean players not attending races having  an advantage I don't think they do. Certainly not in the league I race in of you don't show up to a race you are more than likely gonna finish worse than normal 

I find that I tend to push the tyres and drivers too much, thus rapidly declining the performance of my cars.
Perhaps you need to play now conservatively on your push level? Try an aggressive tyre strategy, but keep those tyre temps below 10% heat, or so. I've secured a 1. and 2. on the last stint on "very low" push level, because my direct opponent was pushing his tyres to obliteration trying to gain in on me.

Anecdotal value, I know, but this is my meager observations so far. :-)

Also, don't waste your boost until you REALLY need it. If it all.

The red and blue zones aren't colored like that for fun, if you reach these, you are getting really slower than normal, keep that in mind.
The overcut, because of the difference in fuel, works in 90% of all casses.
Your strategy is the most important, if you are on a worse strategy, no wonder you lose versus a better one, even managed by the AI. And drivers aswell, six levels higher drivers will be harder to be with yours than some who are worse than yours.