I have seen this lecture several times. The first time, years ago, had a defining impact on my personal interests and played a direct role in my gravitating towards ALife and DB. Everybody associated with DB has to watch this at least once.
The points he makes regarding collision detection (as a proxy for unpredictable messy interations) limiting the potential of ALife simualtors are very germaine to DB. It is one of the pitfalls of a closed simulated environment, particularly a high-level environment like DB which attempts to simulate real world physics. In such simulators, all the physics, all the potential interactions have to be delibertly coded into the simulator and there is a computational cost for every added degree of freedom, limiting the potential complexity that can possibly evolve. It is why bots can't see shots, why shots can't hit ties, why ties arn't subject to friction or fluid resistance, why there is no collision detection between bots and ties, etc.
I've mused on possible ways to address this limitation in ALife sims ever since I first saw this lecture years ago. About the only usefull conclusion I've reached is that I think the evolution of truly open-ended virtual organisms (which I define as having no inherent limt on the potential compexity they can evolve) will ultimatly require that they evolve outside a closed system. DB is a closed system I.e. the bot's universe is constrained to that of the simulator and to only those things the programmer enables. True open-ended virtual organisms will need to escape the confines of a close system and exist as naked processes (or viruses infecting host processes) and be exposed to the full potential of messy interations with everything running in the largest virtual world possible I.e. the set of connected computers which make up the Internet. (This theme of an evolving computer 'virus' is core to the SF book I am working on.)
Simulator-less Alife organisms must carry with them their own reproduction and mutation mechanisms as well as code for their own morphology. That is, there is no simulator to provide them with eye values. While in DB we are focused on evolving behaviour, simulator-less organisms will need to evolve not only behaviour but senses, mobility mechanisms and everything else. But it would allow for the potential at least to address another limitation Dennett mentions, which is the ability (or in simulator-bases systems, the inability) to evolve new morpholgical senses (he uses the example of photo-sensitivty in Carl Sim's evolved organisms in his lecture.)
The last thing I'll comment on are the comments he makes regarding hand-authored DNA towards the end of the lecture when describing the attempted bootstrapping of evolution by the researchers in the real-world shape-seeking robots. He speaks to the fragility of hand-authored organisms and how quickly evolution dispenses with a human-coded approach. This goes to the heart of comments I have made on the forum regarding the use of hand-authorred DNA in zerobot evolution sims. I look forward to the day in the not too distant future where hand-authored bots in DB simply cannot compete effectivly with evolved ones.