While I agree on the POW and lack of scalability, I do think that two projects are working on some great solutions that can very easily be integrated into the Bitcoin source code if the miners will let them. They are DPOS from Bitshares, and the scalability solutions using patricia trees that is being used with Ethereum. These two projects are game changers when it comes to cryptocurrency and if Gavin doesn't implement anything they put in when it is shown that these methods work, I think Bitcoin will go the way of Napster and die (I don't understand why everything has to go through bitcoin...if the infrastructure works for bitcoin, chances are it'll work for other cryptocurrencies).
Reputation based decentralized systems aren't exactly grand slam upgrades, it's removing some attack vectors and creating others....
With PoW, you have to worry about pools colluding. With DPOS, you have to worry about if half the delegates are really only 1 guy with little ability to find out since reputation can be gamed without much difficulty. It's a pseudo-expendable resource, not a real one. DPOS scales better, but it's more dangerous all around. It's also not inclusive to the population in general. Anyone can become a Bitcoin miner without an invitation, which is why it's succesful. DPOS is a closed system.
