Second, I don't quite get the point you are trying to illustrate with this convoluted example. Is it that sims are intrinsically valueless or what? I don't see how this follows. Maybe some calculation is in order.

It's that if sims that have less copies - are less "real" - are worth less, for the reasons presented above, then the whims of the many are worth more than the lives of the few, or the one.

Not by a long shot. Pratchett has weirder ones in every chapter. For example, Only You Can Save Mankind.

Speaking as a Pratchett fan who's read pretty much everything he ever wrote, although it's been a while since I read OYCSM, I don't understand this. Ankh-Morpork is a weirdtopia, and so are a few other things he's written, (eg the "tradition as dead voting rights" bit from Johnny And The Dead,) but I don't recall anything like this. Maybe I'm just being an idiot, though.