How are truly fundamental breakthroughs made?

Usually by accident, by one or a few people. This is a fine example.

ought to be more difficult than building an operating system

I personally suspect that the creation of the first artificial mind will be more akin to a mathematician's "aha!" moment than to a vast pyramid-building campaign. This is simply my educated guess, however, and my sole justification for it is that a number of pyramid-style AGI projects of heroic proportions have been attempted and all failed miserably. I disagree with Lenat's dictum that "intelligence is ten million rules." I suspect that the legendary missing "key" to AGI is something which could ultimately fit on a t-shirt.