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I agree this is a terrible idea. By the way the now centralized TBF would likely become a MSB under US law and be subject to MSB regulations. There is a clear lesson here from what recently happened to Ripple.
Now back to the thread topic. Increasing the 1MB blocksize limit is an absolute must for Bitcoin.
I agree that we need bigger blocks, but just increasing the limit to 20 MB will just push the problem into the future and not solve it. Eventually we will have a "20 MB is too small for a block" problem and the same discussions starts all over again. We also might run into the problem sooner than we expect, because bitcoin is not used uniformly through out the day. There are times with more TX and times with less TX, which is only natural as there are times when people sleep and time when they move their coins around. Thus "30% full on average" might actually be 80% full durring "prime time".
IMHO the blocksize limit and the propagation speed are closely linked. As long as miners have a strong incentive to miner small blocks due to higher orphaned rate for big blocks a raised limit alone might not solve the issue at hand.
Fortunately, IBLT decouples the link between block size and propagation speed, although at extra cpu cost, and is likely to be most effective when the average block size is >10MB at least, a number of years away yet.