You need to make allowances for the A.I. limitations, for buffaloes, make sure to only give them guided missiles so that they can fire straight through allies. If you give them short range weapons, they will try to get close enough to use them.
I would advise against deploying them early, wait until you destroy most of the opponent's frigates. Frigates will flank your forces, and even light weapons will tear your Buffaloes to shreds.
Whenever you DO deploy them, make sure you have some aggressive, tanky ships that get in between them and the enemy.
On their own, A.I. controlled Buffaloes are just too soft, you will probably never make a Buffalo build that will work in a one on one fight in the simulator.
They only function if you can make them work in tandem with other ships that make up for their inadequacies.
If you can figure out a good fleet composition, the Buffalo MK2 can field and unnatural amount of guided finisher missles for very few deployment points(42 harpoons for 2 DP is VERY good.)
Let other ships provide P.D., shields, armor, shield breaking weapons and anything else, buffaloes are all about harpoons or long range support missles.
EDIT: try it with and without militarized subsystems. The hullmod is supposed to change civilian ship behaviour a little bit.
