Dear Jonathan,
I absolutely agree with your words "Determining unambiguously whether a system is creating information or is created by information is thus virtually impossible - as the two modes are so deeply intertwined".
I think that both "It" and "Bit" are basic reality to us and "information" is image of that reality to observers like us who are also part of those "It" and "Bit". So "It", "Bit", observer and obviously "information" are 'inseparable' in my essay (http://fqxi.org/community/forum/topic/1855) too.
Since all those are conceptually quantized/digitized,the observers like us unable to see the nature other than quantized/digital ways, that's our basic limit what has imposed by the nature to us. So we can only model our observable range of that nature and never define anything out of that part of it even if there anything. So, all the mystic things in our perceptions: spirit,ether,absolute vacuum in space, probabilities and so on are always stay out of our that observable sphere of reality.
I am a very slow reader and at this very end hours of this essay contest. But fortunately (or unfortunately) I'm seeing that we are almost at the same position of community rating scenario. I like to give you full rate for your good presentation. So can we think for some mutual rating? Because, I think, we are talking about something very nearer and even positioned there as well!
However I wishing good hope for you in the contest.
Regards
Dipak