IMO the key to total decentralisation would be a mining revard system which pays equal reward to each miner, no matter how much hash the miner contributes. Of course there should be a minimum hashrate to get rewards.
This would kill the arms race, but I dont think its possible.
This can never work over the long run. It will fail for the same reason that all socialist/communist schemes fail - hashrate costs resources. If you create a system where resource/productivity investment is not rewarded based on a free-market curve, investment in resources and productivity lags behind he efficient frontier and generally declines until everyone is poor. Attempting to "fix" that problem by setting an arbitrary minimum resource investment (presumably decided by some central committee) will forestall the ultimate failure of the system, but not prevent it. Committees setting arbitrary investment/production quotas have historically proven to be horrendously unreliable market price setting mechanisms.
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