Long before you have to worry about the software finding an unintended way to achieve the objective, you encounter the problem of software not finding any way to achieve the objective
Well, obviously, since it is pretty much the problem we have now. The whole point of the Friendly AI as formulated by SI is that you have to solve the former problem before the latter is solved, because once the software can achieve any serious objectives it will likely cause enormous damage on its way there.
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Just because software is built line by line doesn't mean it automatically does exactly what you want. In addition to outright bugs any complex system will have unpredictable behaviour, especially when exposed to real word data. Just because the system can restrict the search space sufficiently to achieve an objective doesn't mean it will restrict itself only to the parts of the solution space the programmer wants. The basic purpose of Friendly AI project is to formalize human value system sufficiently that it can be included into the specification of such restriction. The argument made by SI is that there is a significant risk a self-improving AI can increase in power so rapidly, that unless such restriction is included from the outset it might destroy humanity.
Just because it doesn't do exactly what you want doesn't mean it is going to fail in some utterly spectacular way.
You aren't searching for solutions to a real world problem, you are searching for solutions to a model (ultimately, for solutions to systems of equations), and not only you have limited solution space, you don't model anything irrelevant. Furthermore, the search space is not 2d and not 3d, and not even 100d, the volume increases really rapidly with size. The predictions of many systems are fundamentally limited by Lyapunov's exponent. I suggest you stop thinking in terms of concepts like 'improve'.
If something self improves at software level, that'll be a piece of software created with very well defined model of changes to itself, and the very self improvement will be concerned with cutting down the solution space and cutting down the model. If something self improves at hardware level, likewise for the model of physics. Everyone wants artificial rainman. The autism is what you get from all sorts of random variations to baseline human brain; looks like the general intelligence that expands it's model and doesn't just focus intensely is a tiny spot in the design space. I don't see why expect general intelligence to suddenly overtake specialized intelligences; the specialized intelligences have better people working on them, have the funding, and the specialization massively improves efficiency; superhuman specialized intelligences require lower hardware power.