Is there any use for sequence at all (other than backwards compatibility)? It seems whatever Satoshi intended sequence to be used for can never be enforced.
It is useful for making microtransaction channels bidirectional. This is also possible without transaction replacement, but at some cost:
https://bitcointalk.org/index.php?topic=814770What do you mean with "can never be enforced"? If a replacement is broadcasted long before nLockTime expires, it is unlikely that any miner doesn't receive it. Once nLockTime expires, each honest miner will include the latest update into its block. Most non-honest miners will do this too, because their only interest in your transaction is to capture its transaction fee. Only non-honest miners who have a higher stake in your transaction might choose to ignore a transaction update.
So, as far as I can see, the only "enforcement" you need is against a certain (typically very small) percentage of miners which might have a special interest in cheating. This "enforcement" could be in the form of other miners who refuse to build upon a block with an outdated version of a transaction. I'm not sure this is a good idea though: you need to be absolutely certain it won't ever break consensus in the long term. IMHO, preventing a long-lived block chain fork is much more important than any feature provided by trying to make transaction replacement 100% secure.