The leveling system is a bit off. Level 3 doesn't mean "better" than Level 2. A Level 2 system might actually offer the best safety profile of any of the Levels. That's what I'm getting at: there's a lot of runway in Level 2 systems, and I think they'll be so good that it will kill momentum for Level 3+ systems.

The problem is that when a level 2 system gets too smart it can confuse drivers and lead to bad reactions in response.

e.g. let's say you have a level 2 system which starts auto-evading, suddenly steering without user input, the user is likely to reflexively try counter-steering in response.

Yes. Eliminating or vastly reducing the head-on collisions caused by drivers drifting across the center line, and the rear-end collisions where they don't see the stopped or slow car ahead of them, are a huge win. I'd trade full self-driving for really effective lane departure warnings and auto-braking collision avoidance any day of the week. Next step (or included) would be reacting to red lights/stop signs if it appears that the driver is not stopping. Deal with those things well and you've eliminated the causes of most serious accidents.

I think Mercedes has level 4 on highways now? I think this is the way forward actually, let cars drive cars themselves on the long boring bits (which are actually easy for AI) and leave the driving to the humans everywhere else. Having tried many augmented systems I don't believe in self driving in varied conditions within 10 years. I think the locations where waymo operates is a good indication of what is possible at the moment.