If the malleability issue was resolved, would spending unconfirmed outputs be then realistic or still too risky.
It will be very difficult to eliminate all possibilities of malleability 100%. However, if it could be eliminated, it would make spending unconfirmed outputs significantly safer, and acceptable in many cases.
Surely spending unconfirmed transaction breaks the whole purpose of Bitcoin, to remove trust by replacing it with absolute certain confirmation of the transaction.
The unconfirmed transaction would need to be confirmed eventually to have certainty and remove necessary trust, but there are many circumstances (such as tipping) where spending unconfirmed transactions could be acceptable if malleability weren't a problem.