If we manage to create life capable of doing 1) and 2) but also capable of self-improvement and self-design of their intelligence I think what we've just done is created the next step in the universe understanding itself, which is a good thing. Bacteria didn't panic when multi-cellular life evolved. Bacteria is still around, it's just a thriving part of a more complex system.

At some point biological humans will either merge with their technology or stop being the forefront of intelligence in our little corner of the universe. Either of those is perfectly acceptable as far as I am concerned and hopefully one or both of them come to pass. The only way they don't IMO is if we manage to exterminate ourselves first.

Bacteria obviously lack the capacity to panic about the emergence of multicellular life.

A vast number of species are no longer around, and we are relatively unusual in being a species that can even contemplate its own demise, so it's entirely reasonable that we would think about and be potentially concerned about our own technological creations supplanting us, possibly maliciously.

> and essentially all humans will become the starving artists

all of these assumptions miss something so huge that it surprises me that so many miss it: WHO is doing the art purchasing? WHO is evaluating the "value" of... well... anything, really? It is us. Humans. Machines can't value anything properly (example: Find an algorithm that can spot, or create, the next music hit, BEFORE any humans hear it). Only humans can, because "things" (such as artistic works, which are barely even "things", much more like "arbitrary forms" when considered objectively/from the universe's perspective) only have meaning and value to US.

> when we will all be killed off by our robot overlords

We won't. Not unless those robots are directed or programmed by humans who have passionate, malicious intent. Because machines don't have will, don't have need, and don't have passion. Put bluntly and somewhat sentimentally, machines don't have love (or hate), except that which is simulated or given by a human. So it's always ultimately the human's "fault".

>who is purchasing art

Mostly money launderers, I've heard.

>we won't be killed off by AGI because humans don't have malicious intent

I wouldn't say malice is necessary. It's just economics. Humans are lazy, inefficient GI that farts. The only reason the global economy feeds 8 billion of us is that we are the best, cheapest (and only) GI.