I only skimmed the paper since it has 66 pages and i barely understand how this supposed to work. But since the main advantage of 2stage is handling non-cooperative/responsive party, i doubt it'll have major impact in scaling since many people will just stop making transaction the other party unless the other party show commitment that they will be cooperative/responsive.
On a side note, the idea of eliminating watchtower is rather interesting. But i doubt the practicality since party which doesn't want to rely on watchtower need to put latest state of the transaction before specific window time.