Depending on the character the AI plays, it can be pretty annoying or just a slight bother. For me though, the lunatic AI generally plays like the easy AI, except where it's a possibility with the easy AI, it's a certainty with the lunatic AI. If you're under the opponent, prepare to be smashed into the ground. If you missed, prepare to be slung into the far wall. If you pull a spellcard, you'd better have pushed the AI off balance first or it'll all go to waste.
Oh, and when meleeing the AI, remember that the AI will almost always start a hit chain before you. And if you actually do start the chain, you'd better be really fast or it'll break your combo almost instantly and start its own. The lunatic AI plays almost exactly like the easy one, only a lot faster.