This missive may be summarised in the following manner:
Every since John von Neumann came up with the notion of a Universal Computer and Universal Constructor for self-replication in the 1940s (before the notion of a "gene" was discovered!), I've been fascinated by the issue of self-replication.
Self-replication (particularly in biological systems) is a product of emergence (i.e., when a complex set of interactions between the individual units is formed that the network of interactions becomes an entity in and of itself, forming a complex adaptive system). Emergence is at least a necessary condition for self-replication to occur. Emergence is a case of tangled hierarchy or Strange Loop, as Douglas Hofstadter would put it.
In general, self-replication of a system can be characterised by tangled hierarchies or Strange Loops and emergent/complex behaviour when a network is created between the individual components of the system within the confines of a selective environment. "Life" could be considered to be either emergence, or the property of an emergent system when it can self-replicate (i.e., preserve its complex organisation by a transfer of information). This is simply an issue of definition.
As von Neumann realised, environment is one of the key ingredients that will make for a self-replicating and self-evolving system. Without a sufficiently complex (selective) environment, the individual units within a system will never form a complex dynamic network of interactions and will remain stagnant.
Self-replication is tied in intricately to evolution. In any evolutionary system (i.e., where the environment imparts a "survival of the fittest" selective pressure because it is constantly changing), the ability to evolve is selectively advantageous. Self-replication is a necessary condition for evolution. While it is possible evolution of a species or an organism can occur without replication, our biological universe works in this manner. Alternately, any modification (evolution) in a non-replicating system can be thought of as process by which replication and change are merged into one.
In any evolutionary system, the ability to self-evolve is selectively advantageous. While there may be exceptions to this, I think it is true given the neo-Darwinian paradigm we currently hold. Interestingly, however, if a creature or species developed the ability to self-evolve (i.e., perform directed evolution on itself in response to environmental changes), then it would violate the neo-Darwinian paradigm (i.e., that changes (mutations) occur independently of the biological needs of the organism).
The idea of self-evolution isn't as far fetched as it would seem: mini-evolutionary systems (i.e., the immune resistance and clonal selection) exist within our own bodies that do this to a certain degree---except that the genes aren't incorporated into the germ line.
Also, humans are good example of a species capable of self-evolution (à la Gattaca and many other science fiction movies). It remains to be seen whether any undiscovered molecular mechanisms exist to accomplish this goal, one of the focuses of my research.
Within the confines of an evolutionary environment, the ability to self-evolve is selectively advantageous (particularly when there are other species/populations also evolving). Species that possess traits that allow them to choose mates with beneficial traits and discard those without engage in a primitive form of self-evolution. To self-evolve, there must be some sort of sentience or self-awareness (in other words, there must be a "direction" that is present that tells an organism its status in relation to its environment). Sentience is a by-product of (the complexity required for) the trait of self-evolution. In other words, I believe the reason why we have the complex brains we have today with all its abilities is so we can make a statement about performing genetic engineering on ourselves.
Note that I am not saying that the complexity in our brains responsible for the awareness (knowledge) that leads to genetic engineering is directly inheritable, for at least two reasons. First, complex traits such as intelligence require the interactions of many many molecules. Due to the chaotic/complex nature of these interactions, they are unlikely to be prone to any predisposition. Second, our genomes are fairly small and reencoding a specific arrangement responsible for a particular piece of knowledge becomes intractable. These are the same reasons why complex memories aren't inherited (though some may dispute me on this). This still doesn't explain why simple memories (such as antibodies against a disease) aren't inherited. Perhaps there is an evolutionary advantage (or even test) to be able reacquire information.