Yes, the trainer AI in red/blue was very bad. I believe there were only actually two (perhaps three) tiers used in all battles - trainers, gym leaders/rival? In any case, they would always use a super effective or neutral move against the primary type of the opponent, but they did not consider the secondary typing. Since there were a lot of non-damaging moves, trainers would also spam things to no effect because of the "type" they had (based on the effectiveness).
I believe they mentioned this (among other glitches) during the speedrun from the last speed demos archive marathon. There is also a page with the decompiled AI from red/blue dumped somewhere, but I can't find it.