I agree with you, there is no chasm or absolute separation. Its a gradual spectrum from single atoms through molecules, amino acids, cells, to neural networks and finally self-conscious qualia as some kind of emergent property. All things organized has an element of virtuality to it. Patterns that reproduce themselves live in some sense of that word. Patterns that can model external reality has at least a rudimentary form of subjectivity. And finally, patterns that can reflect upon patterns (even self-referentially) and manipulate patterns in some kind of a mental workspace — has, if you don’t me using the arcane word for it, a soul.

I’ve written a related post that might be of interest to you, where I attempt to give a physicalist account of the history of the universe (which oddly results in kind of undermining physicalism).

I’m looking forward to read more about your theory. I read your post on leaky abstractions, and find this TCP metaphor very interesting, but I hope you’ll write up a more detailed post later, because I don’t really see the outline of your theory yet. Specifically, I’m interested in why you focus on history (and in what sense), and what properties you believe abstractions can have (the examples you give are abstractions within realism, and with obvious practicality to them, but what are the extremes?).

Interesting blog, by the way.