". . .Rand's heroes didn't seem to have any sort of moral development; the good people were good, and the bad people were bad, and there wasn't any engagement with the question of how to become good."
Exactly. Rand's stories read like a Western. Of course I'd like to be as heroic as John Gault or Howard Roark, but in addition to my own shortcomings, the world I inhabit is messier than theirs. It contains a complex variety of people and issues, not just a simple division between looters and creators. Withdrawing from an unworthy world may provide smug satisfaction, while appealing to one's ego, but as you concluded, we must engage with the world in order for it to be changed.
I agree. I was making a similar point. The artificial worlds Rand created had lots of sharp boundaries.