It will not meaningfully generalize beyond domains with easy verification.
I think most of software engineering and mathematics problems (two key components of AI development) are easy to verify. I agree with some of your point of how long term agency doesn’t seem to be improving, but I expect that we can build very competent software engineers with the current paradigms.
After this, I expect AI progress to move noticeably faster. The problems you point out are real, but speeding up our development speed might make them surmountable in the near term.
I feel myself being equally scared of hackers taking over as leaders. Even if you limit the people who have ultimate power over these AIs to a small and extremely trusted group, there will potentially be a much larger number of bad actors outside of the lab with the capabilities of hacking into it. A hacker who impersonates a trusted individual or secretly alters the model spec or training code might be able to achieve an AI assistant coup just the same.
I’d also recommend a mitigation of also requiring labs to have very strong cyber defenses. Maybe the auditing mitigation includes this, but I think hackers could hide their tracks effectively.
This story obviously depends on how the cyber offence/defence balance goes, but it doesn’t seem implausible.