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Then it sort of reaches an equilibrium, then, doesn't it? Where members of a species become so homologous and clonal that a single disease or something wipes them all out - except for the mutants in the population who didn't inherit the "perfect" polymerase sequences, etc.
Right. The more variable the environment, the more useful a higher mutation rate will be. Also, making DNA replication more faithful (and making transcription and recombination less mutagenic, etc) probably carries a direct cost to the organism, either in the time required for replication or the energy requirements. So a balance is likely to be achieved, not an endless improvement. Start searching on "evolution of mutation rates" and see what you find.
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