I think the important facts about the mirror are that it is a not-quite-right AI that fails to give you what you want, and that it is Harry's future big problem - there was no way EY was going to let intelligence not be the final problem, and so it is this that lies in the future of the current story.
Throughout HPMOR, the author has included many fascinating details about how the real world works, and how to gain power. The Mirror of CEV seems like a lesson in what a true Friendly AI could look like and do.
I've got a weirder theory. (Roll for sanity...)
The entire story is plausible-deniability cover for explaining how to get the Law of Intention to work reliably.
(All quoted text is from HPMOR.)
"This Mirror" is the Mind, or consciousness. The only thing a Mind can be sure of is that it is a Mind.
A Mind's most characteristic power is to create alternate realms of existence, though these realms are only as large in size as what can be seen within the Mind.
More specifically, the Mirror shows a universe that obeys a consistent set of physical laws. From the set of all wish-fulfillment fantasies, it shows a universe that could actually plausibly exist.
Actors store other minds within their own Mind. Engineers store physical items within their Mind. The Mirror is a Mind.
The Mind alone of all the stuff that exists possesses a true moral orientation.
An ideal Mind would grant wishes without creating catastrophes. Unfortunately, we're not quite ideal minds, even though we're pretty good.
My self-image can only go where it is reflected in my Mind. In other words, I can't imagine what it would be like to be a philosophical zombie.
Let's interpret this scene: We've got a Mind/consciousness (the Mirror), we've got a self-image (Riddle) as well as the same spirit in a different self-image (Harry), and we've got a specific Extrapolated Volition instance in the mind (Dumbledore shown in the Mirror). This Extrapolated Volition instance is a consistent universe that could actually exist.
It sounds like the Process of the Timeless trap causes some Timeless Observer to choose one side of the Mirror as the real Universe, trapping the universe on the other side of the mirror in a frozen instant from the Timeless Observer's perspective.
The implication: the Mind has the power to choose which Universes it experiences from the set of all possible Universes extending from the current point.
This seems like another giant hint about magical powers.
The author is disappointed that we don't get his hints.
If the conscious mind was in reality a wish-granting machine, then how could I test this without going insane?
A method to test this seems to be to become aware of one's own ego-image (stand in front of the Mirror), vividly imagine a different ego-image without identifying with it (bring in a different personality containing the same Self under an Invisibility Cloak), suddenly switch ego-identification to the other personality (swap the Invisibility Cloak in less than a second), and then become distracted so the ego-switch becomes permanent (Dumbledore traps himself in the Mirror).
I can't think of a way to test this without sanity damage. Comments?