I think that the hope is that by bolstering your intelligence with each successive iteration (honoring the full letter of CEV) you would be thinking more precisely, and more easily spot any errors or fuzziness in your own reasoning. For example, Armstrong 5's reasoning is incoherent in several ways, most glaringly that he would "value all worthwhile things" which could be written without distortion as "value all valuable things" which is obviously circular. I doubt that Armstrong 1 would make this mistake, so Armstrong 5 should be even more likely to spot it.
Also, I thought that implicit in the "Coherent" part of CEV was the idea that Armstrong 1 would have to in some sense sign off on Armstrong 2 before going further. Maybe give Armstrong 2 a chance to plead his case to Armstrong 1; if his arguments for moral revision are accepted, proceed to Armstrong 3; at no point are you required to delete Armstrong 1, nor should you, because he is the only possible basis for maintaining coherence.
My main objection to Coherent Extrapolated Volition (CEV) is the "Extrapolated" part. I don't see any reason to trust the extrapolated volition of humanity - but this isn't just for self centred reasons. I don't see any reason to trust my own extrapolated volition. I think it's perfectly possible that my extrapolated volition would follow some scenario like this:
There are many other ways this could go, maybe ending up as a negative utilitarian or completely indifferent, but that's enough to give the flavour. You might trust the person you want to be, to do the right things. But you can't trust them to want to be the right person - especially several levels in (compare with the argument in this post, and my very old chaining god idea). I'm not claiming that such a value drift is inevitable, just that it's possible - and so I'd want my initial values to dominate when there is a large conflict.
Nor do I give Armstrong 7's values any credit for having originated from mine. Under torture, I'm pretty sure I could be made to accept any system of values whatsoever; there are other ways that would provably alter my values, so I don't see any reason to privilege Armstrong 7's values in this way.
"But," says the objecting strawman, "this is completely different! Armstrong 7's values are the ones that you would reach by following the path you would want to follow anyway! That's where you would get to, if you started out wanting to be more altruistic, had control over you own motivational structure, and grew and learnt and knew more!"
"Thanks for pointing that out," I respond, "now that I know where that ends up, I must make sure to change the path I would want to follow! I'm not sure whether I shouldn't be more altruistic, or avoid touching my motivational structure, or not want to grow or learn or know more. Those all sound pretty good, but if they end up at Armstrong 7, something's going to have to give."