Wow! Really good comments, thanks; I like the parallels you draw with your simulated universe and your book is straight onto my reading list.
In the last point where you ask about how I reconcile the lack of God's knowledge of the future, as a sign that he hasn't made time.
I am saying so from religion's point of view, I'm trying to break down the statement God is all knowing, that statement on its own perhaps isn't enough. But when you add the term, God is all knowing and he created the universe, then that is saying that God created time.
As far as we're concerned there was no time before the universe, in the same way there was no time for lines of code in your universe, before the simulation began. You created time for your AI elements, so you are the creator of time, however you're not all knowing, so your AI have free will.
But unlike your universe, religion insists that; you can't fool God, and he is all knowing. So if God created time and knows the future, it is because as far as God is concerned, there is no future. The time he has created to him is omnipresent, therefore, the religious God, knows everything that can and will happen.
In that instance, we don't have free will, like trains on a track, we are at the Great Signaler's mercy, this directly contradicts religion and it has to.
The original progenitors of the main religions, whilst trying to assert their imaginary God's power, couldn't create a scenario whereby people can say; "It doesn't matter what I do, because it's all been planned out." In that matter, you won't have control, you'll have chaos.
So free will is an important component of organised religion; as is omniscience, because you can't have the flock, thinking they can hide things from God.
However, the two cannot coexist, free will cancels out omniscience and vice versa, so if religion insists on both states, then God does indeed, disappear in a puff of logic. :-)
CG