It'd be rather surprising if you could train an AI on a bunch of average code, and somehow get code that's always above average. Where did the improvement come from?

We should feed the output code back in to get even better code.

AI generally can improve through reinforcement learning, but this requires it to be able to compare its output to some form of metric. There aren't a lot of people I'd trust to RLHF for code quality, and anything more automated than that is destined to collapse due to Goodhart's Law.