The man in the room may not understand Chinese, but he is using a dictionary, which to a casual observer appears suspiciously thick. Just how thick would the dictionary need to be in order to provide a sensible response for all possible lines of enquiry?

Searle's argument reduces a room which understands Chinese to a dictionary which understands Chinese. A strange loop indeed.

With regard to serious systems attempting to solve AGI — are you aware of Jeff Hawkins' work on hierarchical temporal memory?