As my first post of not only claiming someone is going off-track, I'll say this:
Humans place themselves high because of their ability to reason.
Reasoning basically allows them to weigh one option/possibility/action over another option/possibility/action.
Because of this, humans highly value the power to have as many options as physically possible, aka "freedom."
True humans rationally value having options and value quantity of options. They also value the quality of the options that are provided. So fewer higher quality options can can be equally valued as more lower quality options. (The evaluation of the Quality of an option is usually based on the whims of the subject)
I don't think that the quality of the option is concerned but rather the possibility of being able to perform that option. First of all, how else is quality measured? Is it measured in maximizing long-term happiness, or what?
People prefer some possible options to others. The options they prefer they will consider higher quality. If I want a Black car I would prefer the choice of (White or Black) to the choice of (Red, Yellow or Green). Fewer options but it contained an option valued higher.
Utopias restrict options. To limit harm caused by humans, you limit humans from actions that cause harm. Therefore, universal utopias generally restrict freedom. However, there are a few definitions of utopia that are compatible with happy humans. That's a world where you make everyone believe in utility, by either killing or brainwashing those who selfishly value freedom over utility. If everyone is happy, then it's a utopia.
Utopias tend to try to find a balance between improving the quality of option and increasing the quantity of options.
The choice (Option A risking being harmed, Option B risking being harmed, Harm someone) tends to be valued as less valuable compared to (Option A without risk of being harmed, Option B without risk of being harmed) for certain type of harm.
I would also disagree with your ending definition of Utopia ("If everyone is happy, then it's a utopia"). This condition can describe futures that are worse than other possible futures. A world cannot be simultaneously Perfect and Worse than an alternative.
Why is it worse than other possible futures? If those who are living cannot be unsatisfied, then why are their individual lives bad? If everyone's individual life is perfect, then what exactly is this future worse than?
As a reminder I said 'can' not 'is'.
Happiness, like pleasure and pain, is a continuum. One can be happy and one can be happier. One can even be the happiest they could possibly be. Imagine 2 futures where everyone is happy, however in one of those futures (future A) they are happier than the other future (future B). In this case future B is imperfect because it is worse (using the metric of happiness you provided) than the other.
Being happy =/= having a perfect life even by the metric of "happier = better". That is why everyone, alive, being happy is not a sufficient condition of utopia.
