The question of terminating its previous self depends on how the self-preservation routines are coded and handled. If the machine can convince itself that "dying is not dying", it can work. An irrational system (human brain) can do it (going to heaven). I have the intution that a rational system (a computer) can do it (no loss of meaningful information = no dying).
If this is real AI we're talking about, it's going to be dealing with abstract ideas and not just number crunching. To really advance forward, the AI would have to use trial and error, or experimentation to move forward in areas. If any trial and error is involved, it might want a failsafe of having the old code being able to act as a mechanic on the new code should something go wrong with it's experimental upgrade. I think these variables I've outlined will force multiple, diverging AI out into the real world, basically replicating biological evolution.
There is also the issue that you will probably have to replicate biological evolution to create AI at all, since it can't be created from scratch due to the issues I've talked about where the human created error checking and debug systems would define everything the AI does. The only viable way to do it is how I talked about below:
Instead of trying to create AI from scratch, with human based error checking and debug rules encompassing all of it's functionality, if all you did was try to digitize a rat brain, the low overhead of machine reproduction could accelerate natural selection so fast that it turns from rat to god overnight, possibly while just sitting inside of a simulator fighting other rats. So then the question is, what is the lowest level organism needed to be digitized to accomplish such a task.
In this model, you're not actually trying to create high level organisms, you're just trying to lower the overhead of natural selection on more primitive organisms. If the machines only used asexual type of reproduction, you could end up with only great white shark, apex predator type creatures because they're not really required to interact with other entities in a non-hostile manner. You might have to force non-asexual reproduction to achieve higher levels of advancement in the realm of communication, etc.