Steppenwolf, I thought about "north" and "south" but I didn't want any arguments over who got to be on top. So I used "east" and "west" instead.

In response to your main point... either (a) you're sympathizing with something nonsentient that doesn't actually have any feelings - either deceiving yourself into caring about a person who doesn't exist, or changing the value itself. Or (b) you're losing out not only on present human sympathy, but on future extensions of sympathy, the telepathic bond between lovers a la Mercedes Lackey and/or Greg Egan.

Being in a holodeck, and knowing that the people around you aren't real, has to change either your feelings or your values. That's the problem with the volcano lair, if there's no one there who's real except you. That's the simplicity I fear.

Nazgul, the "comparative standard of living" thing is one of few parts of human nature that I would seriously consider eliminating outright (see Continuous Improvement). But the environmental solution would be, indeed, nonsentient human-shaped entities of lower status, to tell your brain that you're in the elite. Though I don't know if that works - we may have a brain category for nonpeople we don't even compete with hedonically.