I was thinking to cut the chain down in size would be to:
1. Delete any BTC addresses that has less than .001 BTC. Add a merge function button in the wallet that moves any BTC too small together. Let everyone know the chain will restart and only keep btc addresses over .001 in the new chain.
2. The blockchain is filled with the same BTC bouncing around everywhere, do we really need to keep that information, just delete it and keep the current address amounts.
That should cut down the size dramatically and it could be done once a year. Just implementing #2 would be most helpful, #1 would also be helpful but not necessary.
Addresses with <.001, or even .00000001 make up the most important part of the blockchain for those who invision BTC micro payments as the solution to problems like spam email
There is a similar case to be made for the history of every coin ever transacted. You and I couldn't care less a about that info, but regulators find it an attractive feature so if you want regulators to like BTC then you will want that info available.
I know nada about how the network works but I'll bet on the smart guys here finding a solution that does not involve every casual user downloading the entire blockchain onto their little mom&pop chromebook. There is enough value being created by BTC to solve all these problems. There will be more fees and I'll bet they will total close to 2% of every transaction with 5yrs. small price to pay for all the other benefits.
You won't need the whole blockchain, or confirmations, or 51 character private keys. That will be managed by whatever replaces Visa & Mastercard (unless they are more flexible then I predict).
Rant over.