Thanks, that's one of the best critiques I've ever heard of my paper.
One minor correction first: you're absolutely right that AGI is about comprehending the environment, not about perfectly solving all environments (the latter is mathematically impossible even with strong noncomputable oracles etc). I'm not sure why people so often come away from my paper thinking I'm saying AGI is supposed to solve all those environments, I never say anything like that. If I could go back in time, I'd make that clearer in the paper. No, it's about the AGI simply being able to comprehend the environments, like you say. And the thesis in the paper is that shoehorning general environments into real-valued-reward environments is a lossy process.
For the rest of your argument, you make a lot of good points. I would ask, what do you say in response to, e.g., Alan Turing who asks us to imagine Turing machines having infinite tape and running for all eternity? Obviously that too is impossible in the finite universe we live in. That's sort of the divide we disagree on. I'm talking about idealized AGI. If we consider human beings, humans have finite lifetimes so any particular human being's entire lifetime of actions could simply be recorded in a finite tape recording. But does that mean said finite tape recording is intelligent? In the idealized world, I would want to say it's a basic axiom that no finite tape recording of a human can be intelligent. But now we're deep in philosophical woods.
I like your point about musicians etc creating further and further derivatives of known successful work as opposed to starting anew :) I guess in terms of my paper, the real question is, if you confronted these derivative musicians with the grand new work that transcends them all, would they recognize it as such, or would they (like an AGI confused by rewards shoe-horned into real numbers) mistake it for something mediocre? Now we are deep in psychological woods!