bot_thinktime is indeed the time a bot takes to think. So if you set it to 0 the bot has 0 msec reaction time and is therefore challenging. It will dodge quicker and shoot better rockets. I'll see if i can show it with a demo
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I think you are correct.
Certainly with the bot I tested (anarki) he dodged much more with thinktime 0 as opposed to thinktime 100, or even thinktime 1.
Also there was a command for disabling bot chat.