The OP gives a valid technical argument for raising block size limit, but is neglecting a financial argument against it.
The miners' income has to be greater than the cost of their work. Miners' income is inflation now, but is expected to be replaced by fees,
since inflation halves every four years. Purchasing power of new coins might be sustained for a while but must converge to zero in the limit.
Transaction fees exist only because there is a competition for block space. Eliminating that competition eliminates the fees and with that mining.
Therefore block space has to become and remain a scarce asset.
Your second and third paragraph contradict each other.
Transaction fees don't ONLY exist because there is a competition for block space. They ALSO exist to pay the miners to secure the network, as you clearly understood before you implicitly denied it. Fees are not an either/or thing. It absolutely ISN'T a case of lifting block limit->eliminates fees->eliminates mining.
We have instead a *feedback* process. LOWER fees (not ZERO fees) means LESS mining (not NO mining) which in turn means LONGER confirmation times (not COMPLETE COLLAPSE) which leads to MORE FEES which leads to mining power switching back on. It's what engineers call a negative feedback loop, designed to keep the hashing rate broadly stable, or at least oscillating within a fairly narrow range.
People really must stop thinking of all the causes and effects in the world as being ON/OFF switches. They aren't. They're analogue dials.
[If you're on board with the idea of bitcoin, you've probably had to deal with people saying a deflationary money supply can't work because NOBODY would ever spend ANY MONEY AT ALL. Same problem. "Less" is not the same as "none". Especially when "Less X" induces "Less Y" which induces "More X".]