It seems to me you are making two assumptions that do not appear necessarily true to me.
The first is that propagation times are not subject to change (improve). What happens when IBLT is implemented and propagation is constant? There are a handful of other improvements that can decrease propagation time and it WILL get worst as big miners improve connectivity between each other. The incentive to mine smaller blocks then kind of disappears and so does the cost to publish larger blocks to a certain extent.
true, also the (existing) miners-overlay-network which is used by most pools already submit headers first.
- still, miners have to validate transactions
- they have to receive it (ok its hard to not receive something)
- they know that if they allow small fee transactions they'll get more small-fee transactions in the future. this seems to be a prisoners dilemma while its not: they rely on bitcoin to continue to exist, because they are invested in it and no company would destroy their own market.
Second is a most common fallacy that suggest all miners are the same, that their decisions can be projected as a group and not as individuals. That is absolutely wrong. Cost per transactions differ from one miner to the others and bigger miners will have incentive to mine bigger blocks and eventually suffocate smaller miners who cannot keep up with their resources.
yes and thats bad. but i dont think this has much to do with blocksizes. atm most mining is done in china for this exact reason: this wont change with bigger blocks.
imho: in the long run bitcoin can only stay decentralized when many households have a miner at home. eg an electric heating device (preferably solo with a bitcoin node integrated in any router; bandwidth subsidized by telco like many do with their video-platforms [at least in germany]).
we just need devices which mine as a by-product.
But of course it has to do with blocksize.
Blocksize is a check on economies of scale so as to level the playing ground. It is absolutely necessary while Bitcoin is still relatively small. Without it the entities with the most resources will make use of the technology available to run out of the market any smaller players.
What you are proposing is indeed interesting but we can absolutely not make decisions based on such abstract potential.