Instead of a strict targeted block time, would it be possible to adjust difficulty partly based on orphan rate? So that as orphan rate increases, difficulty would also adjust upward, increasing block time (and lowering orphan rate).
Likely not. Other than the need for perfect information, an implementation like this would require each node to allocate more resources and validate more blocks that are relayed to them and has a valid POW. By changing the block intervals, you would have to consider the supply limit of the coin. The block halving rate could potentially occur much sooner.
It's more of a hassle to implement a mechanism like this than to just determine the equilibrium of the orphan rate and the block interval and to put a fixed interval to it. 1 second blocks would not be viable for now.