Sounds like the sort of strategy that evolution would invent. Or rather, already has, repeatedly — "build a lot of cheap little war machines and don't mind the casualties" is standard operating procedure for a lot of insects.
But yeah, it's an awesome lesson in "the AI optimizes for what you tell it to optimize for, not for what humans actually want."
Louie and I are sharing a draft of our chapter submission to The Singularity Hypothesis for feedback:
The Singularity and Machine Ethics
Thanks in advance.
Also, thanks to Kevin for suggesting in February that I submit an abstract to the editors. Seems like a lifetime ago, now.
Edit: As of 3/31/2012, the link above now points to a preprint.