I don't have a great understanding of the history of engineering, but I get the impression that working from the theory backwards can often be helpful. For example, Turing developed the basics of computer science before sufficiently general computers existed.
The first computer was designed by Babbage who was mostly interested in practical applications (although admitedly it was never built.) 100 years later Konrad Zuse developed the first working computer and was also for practical purposes. I'm not sure if he was even aware of Turing's work.
Not that Turing didn't contribute anything to the development of computers, but I'm not sure if it's a good example of theory preceding practice.
In AI in general this seems to be the case. Neural networks have been around forever, but they keep making progress every time computers get a bit faster. For the most part it's not like scientists have invented good algorithms and are waiting around for computers to get fast enough to run them. Rather the computers get a bit faster and then it drives a new wave of progress and lets researchers experiment with new stuff.
Anyway, AIXI has been used to develop more practical algorithms.
Forgive me if I'm mistaken, but is AIXI really that novel? From a theoreticians point of view maybe, but from the practical side of AI it's just a reformulation of reinforcement learning. MC AIXI is impressive because it works at all, not because there aren't any other algorithms that can learn to play pac man.
Today, the Machine Intelligence Research Institute is launching a new forum for research discussion: the Intelligent Agent Foundations Forum! It's already been seeded with a bunch of new work on MIRI topics from the last few months.
We've covered most of the (what, why, how) subjects on the forum's new welcome post and the How to Contribute page, but this post is an easy place to comment if you have further questions (or if, maths forbid, there are technical issues with the forum instead of on it).
But before that, go ahead and check it out!
(Major thanks to Benja Fallenstein, Alice Monday, and Elliott Jin for their work on the forum code, and to all the contributors so far!)
EDIT 3/22: Jessica Taylor, Benja Fallenstein, and I wrote forum digest posts summarizing and linking to recent work (on the IAFF and elsewhere) on reflective oracle machines, on corrigibility, utility indifference, and related control ideas, and on updateless decision theory and the logic of provability, respectively! These are pretty excellent resources for reading up on those topics, in my biased opinion.