Then why is the network propagation impedance so high?  Answer: because he's talking about something hypothetical (that is unlikely to ever happen and may not even be possible).  

As a more concrete example, the block relay network today communicates far less than one bit per bit of blocksize to relay a block (e.g. transmitting a 962597 byte block using 3804 bytes-- I wonder why instead you did not announce your discovery that the block relay network has beat the Shanon limit! --- after all, by your metric it can transmit X bits of information over a channel which has _significantly_ less than X capacity).

You assume miners do not have the ability to change their level centralization.

 -- In fact they do, not just in theory but in pratice have responded to orphaning this way in the past; and it is one of the major concerns in this space.

For example it does not reflect how hashers return work to pools _today_ (and since 2011) as they so to only by referencing the merkel
root... the pool already knows the  transaction set. In that particular case it knows it because it selected it to begin with, but the same behavior holds if the hasher selects the transaction set and sends it first.

It only _very_ weakly reflects how the relay protocol works (only the selection and permutation is communicated; not the transaction data itself; for already known transactions). Even if you assume nothing more than that (in spite of the existing reality) you have not shown that the compressed data must be linear in the size of the block.

It does not reflect how P2Pool works (which also sends the transactions in advance).