I like the AI and don't think they should be removed even if they make a separate pve server. People like myself enjoy both pvp and pve. I don't always want to pvp or pve...I think the removal of AI is mainly something large guilds and hardcore pvpers want. As a solo or small group player, this would be horrible, and I would be forced to play on a pve server even though I really enjoy pvp...Plus...how is the solo or small group player supposed to farm gold or XP? At that point, you'll be forced into a guild to rank up or make money as this would be hard to do solo.
In regards to only have merchant AI ships instead I would find that boring....I want to be able to get into to fights to rank up and make money. Also, something to consider is that fighting AI will help a lot of newer players learn the game and gain sailing skills that they can use to go and pvp.
The Idea of making them non-hostile could work....that way you can only choose to take part in pve while still being able to pvp...I don't know. However, I do know that almost every major online game in which you can pvp still has AI. (Many of those games have pve servers as well.)