I think the fundamental problem with Objectivism is that human beings are not purely individual creatures. We can't thrive without others. We can't do great things without the foundation that our ancestors have laid for us. Most of us, save some rare exceptions, can't find lasting happiness without human interaction. An ideology which emphasizes the individual over all else is missing the forest for the trees. The individual can't be the foundation of society; the individual isn't self-sufficient.
A much healthier version of individualism would argue that people should focus on developing their own unique talents, free from "red tape" and oppression, for the benefit of the community. That kind of individualism would both encourage individuality, creativity, and uniqueness while also remaining grounded in the community as central to a good life.