Agreed that the 737 MAX did not help, but this is
also a failure of all of the other regulatory agencies the world over that rubber stamped the FAA approval instead of doing their own. It certainly looks as though this served as a wake up call - it should! - and that a re-occurrence is relatively unlikely in the near future (until everybody becomes complacent again).
Self driving may be a software problem, but that does not necessarily mean that we have the means to make that software a reality today. Given that fact that we know that intelligent beings make plenty of errors and that they are much smarter than your average self driving system, the enormous range of conditions and inputs and the relatively limited amount of computing power that can be thrown at this problem I highly doubt that it is a 'mere matter of software engineering' at this point, taking into account the state of the art.
Agreed that testing it is super complex, in fact, I think that testing is the key: without a fully representative test equivalent to a driving test none of this software should be on the street. That's what we agreed upon: pass the driving test and you are allowed to drive. American driving tests are ridiculously simple, so it should be easy to pass such a test and yet that hasn't even been made a mandatory requirement for certifying a self driving solution. Until then I don't think any of this stuff should be on public roads.
I don't think the CA DMV needs an army of sofware engineers or data scientists, they are first and foremost a regulatory body that can hire external experts to give them guidance, and I suspect that they genuinely believe that self driving systems from these manufacturers are now solid enough to be given wider latitude during this experimental phase. I personally disagree with the decision, but I do think it is progress, that a regulatory body would dare to attach their name to such a decision rather than to play it safe, this is a clear shift in perception. Time will tell whether or not it was the right decision, if it turns out it wasn't there will be a bigger set-back than this was a step forward.