then the alternative is regulation, insurance, consumer protection and all the other centralised, flawed systems that don't come cheap either.
Absolutely not. That is only true for services that touch fiat.
Have you had a look at OpenTransactions for example ?
I'll add it to the list of things like sidechains, pruning and other things that keep getting raised when you run out of arguments. All sound great in theory, but actually need to be finished, ready to go and proven reliable before they can be considered viable alternatives. Until that time comes, the 1MB limit has to go.