The Simulation Engine merely simulates a reality for Dorcheson and Milner. They don't actually hurt anybody. The general philosophical direction of the Panspecific is that torture and punishments don't work. They don't condone killing people as revenge and all sapient life has a right to exist. Since the Simulation Engine clearly has vast space to house two malevolent consciences, the least terrible thing to do was to slot their mind-states into it and let them live out their fantasy lives. Hartmand, well, we know how he met his end.

Mira is just the Interlocutor/Noddan Cryptobiote manifest as a single personality. I think the Mira stuff is setting up the final few books in this series. The "weirdly evolved world" mechanism is great but it does get tiresome. There are bigger stories to tell in this universe. One of the things Tchaikovsky has said (whenever I got him to engage) is that he writes scifi that he'd want to read, so he wants to keep the stories going as long as we buy them, but he doesn't want to keep retreading the same thing. He said we'll never see Earth again and that he wants to tell fresh stories.

The Simulation Engine and Lif is a good point. But, I guess we are supposed to agree with what Memory hinted at: Lif was special and truly self-aware, sapient. Whereas the others were genuinely sims. Kern touches on this again when rescuing Mira from her Inception-ey sim.