I understand your point. But it seems to me that anyone who supports this position effectively suggests that the block size limit should be lifted altogether (at least that's the stance of PeterR & a couple others). Otherwise all you're really doing is moving your quota line to the right.
I support BIP101 (Gavin's proposal); I don't support removing the limit entirely right now. The results of my paper apply either in the absence of a limit or if the limit is far above the transactional demand.
So, indeed we are moving the quota line to the right, but so long as the line is far to the right of Q* (the block size that maximizes the miner's profit), then the fee market behaves as described in feemarket.pdf.
Assuming we increase the limit to 8mb. Do you propose that the additional supply will NOT get filled relatively quickly...
Not at all. I suggest that the block space will get filled at close to the historical rate of growth, as illustrated by either the "high" or "moderate" curves in this chart:
...and if it does what step is next, increasing the limit again?
We slowly remove the limit (doubling it every two years) until there is effectively no limit at all.
Before bitcoin can be digital gold, the world needs to understand its value. The first step is to build a payment network for planet earth.