But, of course, subgoals can cause effects that we do not like. The big example is intelligence raising. That is almost as essential a subgoal for any agent as finding the ingredients is for the cake-baker daimon. But you cannot just ban subgoals in general, because the cake-maker does need to find the ingredients.

I accept your clarification that a daimon would need to be able to set subgoals (that don't contradict the core values / end goal).

And, yes, the issue of it deciding to set a subgoal of raising its own intelligence is something that has to be addressed. I mentioned it in passing above, when I talked about efficient use of finite resources.