Proposal for self-pruning Blockchain

NOTE: This idea can be applied to Bitcoin, Litecoin, Ethereum or any other blockchain-based technology.

Today, the Bitcoin blockchain is growing exponentially by leaps and bounds, without any way to cut down its size and remove unnecessary parts of it.
In a few decades it could grow into a petabyte-size database due to exponentially accelerating adoption and skyrocketing number of transactions, hurting decentralization.

But do we need _really_ need to keep all the data since the blockchain was born ?
Possibly not. Possibly, we can remove outdated parts of the blockchain.

But how ? What is the mechanism ?

I think it could be similar to how VMware or VirtualBox merging multi snapshots made over time into a single snapshot, flattening it.
I.e. all blocks, that older than, say, 4 years, are merged every 4 years.

In terms of Bitcoin network, it means creating a new genesis block every 210,000 blocks, after the next 210,000 blocks were mined, i.e. at 420,000 blocks (8 years), 630,000 blocks (12 years), etc... And that new genesis block will have the final state of the previous 210,000 blocks.
This new genesis-block will be created backwards in time, i.e. between block 0 and 210,000.

The idea, is that every client can do so in a decentralized manner, because this new genesis block will be behind 210,000 new blocks mined since, there will be no way to reverse transactions.
The only unsolved part for now, is what to do with older hashes, and merkle tree of the blockchain ? But maybe community can help here.

New Genesis block will have a number (0, 210000, 420000, etc...) and also timestamp, in seconds, since UNIX-1970.

NOTE: My proposal allows to rewrite the genesis block, which is potentially dangerous, it will have security implications, so this needs to be evaluated at more depth.

UPDATES in BLUE:
1. I read Satoshi whitepaper, and in chapter 7 he describes how to remove "intermediate" steps with zero balance.
2. I assume, that Bitcoin max. block size limit will be lifted, in order to allow Bitcoin to grow beyond Visa (2000/tps).
3. Additional idea: every 210,000 blocks is to clean "dust accounts" (i.e. accounts with balances below a certain value, say, 1 dollar-cent), transferring it to miners. -- (not in genesis block, but regular block, as it will be forwardly-created)

-Alexey Eromenko Technologov, 4.Jan.2015

What do you think of it?