The reason it doesn't apply to terminal goals is because when you examine terminal goals, it's what you ultimately care about, so there is no higher criteria that you could measure it against; you are measuring it by it's own criteria, which will almost always conclude that it is the best possible goal. (except in really wierd unstable pathological cases (my utility function is "I want my utility function to be X"))

Thats simplistic. Terminal goals may be abandoned once they are satisfied (seventy year olds aren;t too worried about Forge A Career) or because they seem unsatisfiable, for instance.