If the aliens' wetware (er, crystalware) is so efficient that their children are already sentient when they are still tiny relative to adults, why don't the adults have bigger brains and be much more intelligent than humans? Given that they also place high values on science and rationality, had invented agriculture long before humans did, and haven't fought any destructive wars recently, it makes no sense that they have a lower level of technology than humans at this point.
Other than that, I think the story is not implausible. The basic lesson here is the same as in Robin's upload scenarios: when sentience is really cheap, no one will be valued (much) just for being sentient. If we want people to be valued just for being sentient, either the wetware/crystalware/hardware can't be too efficient, or we need to impose some kind of artificial scarcity on sentience.
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A utility function is like a program in a Turing-complete language. If the behaviour can be computed at all, it can be computed by a utility function.
Tim, I've seen you state this before, but it's simply wrong. A utility function is not like a Turing-complete language. It imposes rather strong constraints on possible behavior.
Consider a program which when given the choices (A,B) outputs A. If you reset it and give it choices (B,C) it outputs B. If you reset it again and give it choices (C,A) it outputs C. The behavior of this program cannot be reproduced by a utility function.
Here's another example: When given (A,B) a program outputs "indifferent". When given (equal chance of A or B, A, B) it outputs "equal chance of A or B". This is also not allowed by EU maximization.