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I see the need for merge-mining on a sidechain as only necessary to interact with and support it's backing store (Bitcoin.) That is, what I would call their 'backing store layer'.
The interaction relies on PoW, and therefore the PoW controls the BTC suspended in the Bitcoin blockchain for the Sidechain. This means a >50% attack can steal all of the BTC that backs a two-way convertible sidechain.
Again, I recommend you read the whitepaper published by Blockstream on sidechains. There are several security vulnerabilities that pegged sidechains with two-way convertibility will have.
You also clearly didn't read my statement on where I do and do not need 'military grade' security. I keep some excess fiat in PayPal, but not my lifes' savings. If they fold and/or steal my money I'll be pissed and I'll try to get it back, but it won't hurt me much because I balance my risk. Indeed, I do the same for fiat in banks. That will be very much the case for sidechains. I'll mainly choose to use sidechains based on my desire to support a particular effort which sponsors them. I'll not put much money into any particular sidechain for some time, if ever, so I simply don't need high level security. I'll use native Bitcoin for my deep storage of real value...unless the bloatchain guys win the war that is.
Even if most transactions occur on lower security sidechains, people will need the Bitcoin main chain to store and access their savings. Now unless you want 1 billion people to only access the main chain once per decade, the 1 MB block size limit needs to be lifted.
Right now it is WAY too early to be trying to force transactions off the main chain. Right now is early adoption phase, meaning Bitcoin needs to grow rapidly and gain users, not look to conduct experiments on block scarcity and off-chain solutions. 1 MB is way too low a figure to set the limit on how much the main chain will scale.
Is it worth self-exile from TOR and other low-bandwith networks just so Bitcoin can attempt to track every coffee bean/bus ticket and be a single point of failure for all transactions great and small?
Two points:
1. Bitcoin needs much larger blocks to simply act as a bank-wire replacement. Forget buying coffees. Please read DeathandTaxes' analysis:
Permanently keeping the 1MB (anti-spam) restriction is a great idea ...Can we stop talking about a cup of coffee please?
You may have heard someone say something like "Every $5 starbucks coffee doesn't need to be on the blockchain so there is no need to raise the limit". The implied message is that while the cost of the limit is that trivial purchases will be knocked off chain you will still have direct access to the blockchain for everything else, but the 1MB restriction puts such a chokehold on transaction capacity that even larger more meaningful transactions will eventually be knocked off as well.
2. I would rather full nodes not be able to use TOR, than end users have to use large financial intermediaries to access the Bitcoin blockchain more often than once a decade. Please read DeathAndTaxes' analysis linked above.