It doesn't seem to include Imaginary nations. The ruleset has the *includes line for all the imaginary nations, but they areNEVER randomly picket. I started 20+ games, each with 126 players and never had an imaginary nation be selected. This is in 2.3.1
EDIT: Checked in 2.2.7, with 30 player-games. Still doesn't work.
In the ruleset under each category of nation is a line: match. If that is changed to 0 then each group is selected from fully randomly, otherwise the AI tries to select from the group that the first player is assigned to.