Can you explain a bit about the mechanism wherein the miner pays into the rollover pool, and why that is different from the 'original proposal'? It is not obvious why this dictinction makes a difference. It seems to still incentivize out of chain payments to miners for transaction inclusion regardless of whether it is paid by the miner, or deducted from the miner's reward, both are dependent on the fees in the block (which aren't there in out of block payments schemes).
I think the penalty is not dependent on the fee:
The miner of a large block must pay a penalty that depends on the block's size.
So it still has to be paid regardless of wether or not the tx fee payment was on- or off-chain.
This is penalty then ONLY taken from the coinbase reward and not also TX fees?
How would this method survive the successive halvings (much less the eventual cessation)?
If it includes the TX fees (which likely it must), then to the extent that fees are off chain, they are not subject to the penalty.