I don't find this 'seed AI, flip the switch, the Miracle occurs' vision too plausible. It's based on the assumption that the capacities an Ai that can redesigning itself will grow geometrically up to some cosmic upper bound. There are plenty less-exciting, perhaps more reasonable scenarios.
Also, don't forget:
Jan 16 2006. Cyc project declared finished. In an epic feat of syllogism, declares red is green. Doug Lenat killed trying to cross street. (apologies to Douglas Adams.)
-matt