Yeah, that didn't came out as clear as it was in my head. If you have access to a large number of suitable less intelligent entities there is no reason you couldn't combine them into a single, more intelligent entity. The problem I see is about the computational resources required to do so. Some back of the envelope math:

I vaguely remember reading that with current supercomputers we can simulate a cat brain at 1% speed, even if this isn't accurate (anymore) it's probably still a good enough place to start. You mention running the simulation for a million years simulated time, let's assume that we can let the simulation run for a year rather than seconds, that is still 8 orders of magnitude faster than the simulated cat.

But we're not interested in what a really fast cat can do, we need human level intelligence. According to a quick wiki search, a human brain contains about 100 times as many neurons as a cat brain. If we assume that this scales linearly (which it probably doesn't) that's another 2 orders of magnitude.

I don't know how many orcs you had in mind for this scenario, but let's assume a million (this is a lot less humans than it took in real life before mathematics took off, but presumably this world is more suited for mathematics to be invented), that is yet another 6 orders of magnitude of processing power that we need.

Putting it all together, we would need a computer that has at least 10^16 times more processing power than modern supercomputers. Granted, that doesn't take into account a number of simplifications that could be build into the system, but it also doesn't take into account the other parts of the simulated environment that require processing power. Now I don't doubt that computers are going to get faster in the future, but 10 quadrillion times faster? It seems to me that by the time we can do that, we should have figured out a better way to create AI.