As much as I understood, this project isn't so much about AI, as it is about a better understanding of biology.
I don't know if the project still lives, or are there other many such works, but Polyworld seemed like an interesting idea (developing AI through evolution): https://www.youtube.com/watch?v=_m97_kL4ox0
I may have misunderstood you, but anyways: Developing AI through evolution is pretty common in AI nowadays. Using genetic algorithms (GA) to evolve parameters for other AI solutions, for instance the weights in an artificial neural network (ANN).
Just finished a project where we did exactly that. A simple ANN with feedback (memory) where the different weights between nodes, gain, bias etc. were trained through GA. After a few generations intelligent behavior started to emerge.
I don't know if the project still lives, or are there other many such works, but Polyworld seemed like an interesting idea (developing AI through evolution): https://www.youtube.com/watch?v=_m97_kL4ox0