This is a very good, but as you said will require a lot of work, seems like a good portion of BTC's code would need to be rewritten.
I don't think the changes are
that extensive. Basically you just need to change the rules for generation transaction validity.
I'd say we're better off just letting BTC croak and eventually once the damage that is caused to public image has faded, transitioning to a better alt will be in the best interest of the whole cryptocurrency community.
Umm... No?
The key here is how is T set. If T is fixed then 2T becomes the hard limit and the problem remains. If T is set based on an some average of previously mined blocks then this may address the problem
We still need some way to determine the optimal block size, but we have much more leeway. The wrong choice will not cause catastrophic failure, rather gradually increasing fees which will indicate that a buff is needed. The flexibility will make it easier to reach community consensus about changing hardcoded parameters.
Reusing what I wrote to Gavin an a private exchange - I don't believe in having a block limit calculated automatically based on past blocks. Because it really doesn't put a limit at all. Suppose I wanted to spam the network. Now there is a limit of 1MB/block so I create 1MB/block of junk. If I keep this up the rule will update the size to 2MB/block, and then I spam with 2MB/block. Then 4MB, ad infinitum. The effects of increasing demand for legitimate transaction is similar. There's no real limit and no real market for fees.
Perhaps we can find a solution that uses an automatic rule for short-term fluctuations, and hardcoded parameters for long-term trends. If a good automatic cap rule can be found, it will be compatible with this method.
Would this address bandwidth issues that China could suffer from if block size was increased?
Only very indirectly - it can help Bitcoin function with a low cap, hence reducing the need to increase the cap.