I will happily concede that you and your colleagues know more about search than I will ever know, and so I find it strange that we're having this argument...your perception of Google's limitations seems so far off that it's as if you've mistakenly referred to them instead of AltaVista.
To answer your questions, yes and yes, Google can derive the meaning of my search without relying on literal interpretation of the search terms. In fact, Google can return what I want even if I deliberately spell every word in the query incorrectly:
"couk besr ribz" instead of "cook best ribs" brings up recipes of how to do good ribs:
https://www.google.com/search?q=couk+besr+ribz
I'm willing to take you at your word, that there is a better way to interpret context and meaning from a search query than however Google does it...but if that is the entire raison d'etre for your search engine, can you come up with at least a few case examples where this is the case? The "cupcakes" you've contrived is clearly hypothetical (and not at all close to what happens in reality), and the ones that I've tried don't seem to show any improvement on human-friendly results. Which is not to say that samuru is a bad product...what you claim to do is incredibly difficult and is exactly the feature that makes Google such a useful, ubiquitous engine...I would love to be surprised but I'm skeptical that a new engine with a fraction of Google's processing power, nevermind the resources for test engineering and algorithm design, can compete with Google here...this isn't a "well, why hasn't anyone ranked search queries in this way before?" in the same way that PageRank/BackRub was 15 years ago...Search engines have been analyzing queries for intent, and their shortcomings in this area are due to it being a very hard problem, and not for lack of desire.