This is such an abstract principle that the principle itself cannot be refuted. The plan sounds fine on paper. "Just iterate bro". But it entirely depends on what rational agents you put into the system. Obviously, if I sub in a 5 year old child everywhere, this loop breaks. Humans and AI, sometimes one is better than the other at certain things, we're still learning.

The only way to test this is to test it out, in real life. Sometimes people see results, sometimes people don't. Note that yes, I am including the entire iteration process - even after iterating, people still don't see results with AI.

I have had both positive and negative experiences with AI, over multi-week projects. But apparently on hackernews, anything positive about AI is proof that AI is superhuman and taking over, and all follies about AI are lies by stupid humans who secretly have psychological dispositions to fear AI. Sometimes the AI genuinely isn't good enough. Are we not allowed to say that now? We might not know why, but it's just the truth.

The other solution is to formally analyze the entire space of possible actions the agent can take a priori. Then yes, you can definitively say whether or not the principle breaks or not. Can you, though? Can you give a formal specification for the space of possible actions for AI and show that your loop never breaks, or breaks less than humans, or any other sensible criteria? If not, then you can't just give an abstract principle and start making inferences from that.