The Xbox can't handle split-screen either, it seems. Or online, for that matter. Right, Criterion?
The AI definitely has an edge. If you take them out, expect them back on your ass immediately. If they take you out, drive like a goddam pro and hope you can catch up. Otherwise the AI will start the immaculate driving and continue to widen the lead.
The winning strategy for all the race modes is; take out a couple cars at the beginning to get your boost meter maxed out. Then drive like it's Burnout 2. If the AI catches up, let them pass then take them out. Then drive like hell till they catch up again.