Yes, but that's not the situation in question, is it?

It's exactly the situation. A computer can manage it's actions in concert with the quality and range of it's perception. A human just puts the foot down and makes the corner feel cool.

You are assuming that sheer intelligence can handle all problems.

Nah more-so assuming it from the other end, that lack of "something" causes the problems, removing the human element eliminates much of them.

he best chess AIs can easily beat the best grandmasters, but no matter how good a chess AI is it isn't going to be able to beat a grandmaster if it starts down a queen.

Not so sure.... but interestingly the best chess players are computers + humans in combination, which is where your augmented systems approach comes in, and will be much of how it is approached in reality for a good while.

Residential zones aren't the only places children show up in.

The risk may well be increased (possibly, but probably not), humans response to that risk should mean kids aren't to be found in the middle of the road too often.

figuring out whether to hit shit1 or shit2 is going to matter.

If it's on the road, it's fair game.

.... Lets take another angle on this that plays into what you're saying...

Road barriers, the big concrete ones that go down the middle. When hit at anything approaching 45deg they'll eject the impacting car up to 12ft in the air, resulting in increased injuries...... but they cost less than $150 to put back in place once you sweep up the blood.... When it comes to these kinda transport systems, a few casualties is acceptable from the systems point of view.