Allowing this weakness to persist just because of the individual gain incurred by deflation is callous and corrosive to the system as a whole.

One need not be "stupid" to have an ill-timed (redundant?) house fire, or be the subject of a clever coordinated attack.

The system at the very least needs a way to liberate lost coins.

Coins that stay dormant for say 100 years are divided up among all current users? Is something like that possible? Ideally the problem should be obviated in some way, but as I say in the following post, those most capable of solving the problem are those least motivated to do so.

It's exactly why trickle down was laughable.

Related: http://bitcointalk.org/index.php?topic=2436.msg33326#msg33326