I don't think off-blockchain is the answer. This completely undermines and defeats the purpose of the block chain being an open ledger. You might as well be another Paypal. The reasons invoked for off-block chain transactions are that the merchants volume is too high for the block chain, that the fees are too high or that confirmation time is too long. For every single of those problems there are known solutions that arent detrimental to the block chain ecosystem.
I think the "another Paypal" solution is exactly what you want here.
Yes, for all the reasons you state. But I think there could be a network of interoperable "another PayPals" with legal relationships between eachother, each performing off-chain transactions for users of any operator in this network, and periodically settling between each other on the blockchain. Each user would sign up for service on their operator of choice, and keep a relatively small spending balance. There would be a standard protocol for payments and settlements that anyone could implement, and merchants wouldn't have to support any particular operator such as CoinBase.
This would be for harmless, non-controversial, everyday humdrum use-cases like buying groceries or cups of coffee. People can yell all they want about this violating the sacred intention of the blockchain as a public ledger, but in fact every cup of coffee ever consumed does not need representation on the blockchain. The blockchain is still there for anyone who is unable or unwilling to use the off-chain network (think controversial or illegal transactions, long-term or high-volume storage, privacy).