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I exchanged emails with Greg Maxwell over several aspects of the paper that he questioned. One point he did make, that I admit is valid but do not personally see as an issue, is that the most profitable "configuration" according to the results from the paper is a single "super pool" made up of ALL the network's hashing power (which would be centralizing). This would minimize the propagation impedance. While I agree that this is true, it seems like just another way of looking at the 51% problem. We already know that if one entity controls a huge amount of hash power they can do nasty things and gain certain advantages. But it would be nice to find a way to explain why this shouldn't happen with more rigour than the "game theory" or "anti-fragile" fallback positions
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I think what a lot of the sharp technical people miss is that realworld markets tend to *not* centralize to a total monopoly, even in a commodity market. A lot of people correctly realize that as bitcoin mining commoditizes, competition will happen on marginal energy cost, economies of scale have large impact, and therefore the market will centralize. People take this to extreme and assume that therefore the market will centralize to a single player with the cheapest energy.
But that usually doesn't actually happen in the extreme. Mining companies will innovate and vertically integrate other services, where the margin on the higher level services easily eclipses any remaining margin on the core commodity product production. Look at oil companies or car insurance... There are plenty of players, despite very similarly centralizing forces as with bitcoin mining.
It kinda boils down to a lack of appreciation for human ingenuity (ability to innovate and vertically integrate driven by profit motive, etc). This is what I think a lot of the small-blockers and uber-decentralists fail to fully understand. I wish I could describe this more rigorously at the moment.
Anyways, great job on the paper, Peter. Awesome that you spent the time to formalize it - the community needs more of that.