" If you're not trying to discover the truth, then what exactly are you trying to understand? "
" This is precisely what I was talking about. What makes my car "my car"? The same thing that makes me "me". Me. Which means, in essence, that the identity of your car, just as the identity of yourself, is based entirely within your own mind and thus cannot be externalized to declare some inviolate "I". "
Except your car doesn't have a mind. Self-awareness adds a new dimension to the concept of identity. Let me give you an example:
Imagine two pencils which look exactly the same in every single detail. Imagine them aligned side by side on a table: pencil 'A' is on the left, pencil 'B' on the right. For as long as nobody touches them, you can always tell A and B from their position on the table. However, if someone scrambles the pencils while you're not looking, and forgets to keep track of which pencil is which, the information about which one is A and which one is B is completely lost, nowhere to be found in the whole universe, despite the fact that pencil A still remains pencil A and B is still B.
That is the single most important characteristic of self-awareness as it relates to identity: if the pencils were conscious, they would be aware of a piece of information that does not exist anywhere else in the physical universe -- they would know who they are without having to make any observation at all. And the point about identity and spacetime is that the thing that makes pencil A "pencil A" is its position in space at any point in time, even when the information about that position is not knowable to any observer. Pencil A can only become pencil B is they could both occupy the same position in space at the same time, which is impossible for any physical object, but perhaps possible for non-physical things such as "awareness" (that is the idea behind Swedenborg's/Yaniru's heavenly sex)
" I cannot see why reductionism would lead to untrue statements. Can you? We're talking pure, simple logic here. "
At the risk of souding redundant, I think Godel already answered your question. If reductionism remains strictly logical, it will always contain an implied contradiction. If reductionism is not strictly logical, then it's not true. Oh, I'm so happy I'm not a reductionist :-)
" What I'm arguing is that the universe does not discriminate between red and orange... "
That does not make sense. If the universe did not discriminate between red and orange, we wouldn't be able to, as we are part of the universe. I think what you're really trying to say is that there are no physical boundaries between red and orange, only linguistic ones. What is red and what is orange is just a matter of convention, and with that I agree.
" the distinction that we draw between the two is entirely human and externally rather meaningless. "
I'm not sure about that. Everyone knows that there are far more colours than we have names for them. It is one thing to use general categories such as 'red' or even 'colour', but it's an entirely different thing to think all words stand for generalizations. If that were the case communication would be impossible.
" The same can apply to identity "
It doesn't, and I hope my two pencils make it clear why.