It seems to me like arguing that we can't build a good computer model of a bridge - because inside the model is all bits, while inside the actual bridge is all spinning atoms.

Not at all. I'm saying that just as it takes more bits to describe a system of crystal spheres to predict planetary motion than it does to make the same predictions with a Newtonian solar system model, so too does it take more bits to predict a human's behavior with a utility function, than it does to describe a human with interests and tolerances.

Indeed, your argument seems to be along the lines that since everything is made of atoms, we should model bridges using them. What were your words? Oh yes:

they are a universal modelling tool

Right. That very universality is exactly what makes them a poor model of human intelligence: they don't concentrate probability space in the same way, and therefore don't compress well.