Rescue, I tested the theory and removed all but 2 mechs, leaving only 1000 squad power [CPC]. However, removing mechs from my squad did not reduce AI rank and difficulty whatsoever. I was matched against all AI and my 2 rank 5 mechs with rank 5 weapons were quickly decimated by equally ranked mechs. On my 1000 SP baby account, AI is usually rank 3 or lower. Accordingly, squad power has apparently little to no effect on matchmaking from what I can tell. Can you please reach out to the developers and provide the actual mechanics used for matchmaking with AI and real players?
Edit: I loaded up another match with my best 5 line up, 2600 SP all rank 5 except one. I was matched against all AI and the AI was a cake walk. Some were rank 3 with rank 3 weapons. Something is seriously flawed!