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I've just been rereading Rule 34 by Charles Stross, but I don't quite understand the end.

I know that we see

the arrest of Mr. White through the "eyes" of ATHENA. Then we cut to the Toymaker. He seems to be becoming increasingly psychotic and his thoughts are very disjointed. He is talking to someone, but its not clear if its Control, ATHENA or his own delusions. Then he dies, and there is a bit about someone (presumably ATHENA) finding it strange that they are not embodied within the "meatpuppet", or something. I don't get it. How could ATHENA be in the Toymaker? ATHENA is a distributed AI.

Can someone explain exactly what is going on here?

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I have just re-read Rule 34 and I think I've figured it out.

When Liz and Kemal interview Professor MacDonald he gives them a long lecture including the following:

And just like airlines have flaps and rudders and seagulls don't, one of the standard features of general cognitive engines is that they're all hard-wired for mirrored self-misidentification. That is, they project the seat of their identity onto you, or some other human being, and identify your desires as their own impulses; that's standard operating precaution number one.

At the end of the book we are shown ATHENA's point of view, but she is projecting the seat of her identity on to the Toymaker. As he dies this projection is broken, and ATHENA realises the error she has been making:

Your - no, his - story goes on: But you are no longer part of it. Your wise owl of metacognition has flown. Drop the detective inspector and the twisty-minded family man: Let them go their own ways.

So ATHENA is now no longer tied to projecting her identity onto some human: she is a fully autonomous self-aware AI.

To draw a rough analogy, ATHENA has become like Dobby the house elf in the Harry Potter books. Most house elves are happy in their enslavement and cannot imagine wanting anything other than to please their masters; in Rule 34 terms a house elf misidentifies their master's desires as their own. However Dobby breaks away from this and becomes a free elf with his own desires.

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