Blockstream is leading the development of a block size increase with a number of upcoming BIPXXX release as I understand it.
The Flexcap idea doesn't make sense to me. It seems Adam is trying to artificially make it more expensive for miners to publish large blocks. The reason this doesn't make sense to me is that even without a block size limit it would be more expensive for miners to publish large blocks due to the orphan cost. Why use "Flexcap" to simulate the natural supply and demand dynamics that already exist?
The fact that larger blocks are more costly to produce is illustrated in Fig. 8 of this paper:
your beautiful graphic can't help you Peter.
you have been well advised that propagation time is not a constant and will very much improve over the years making it increasingly cheaper for miners to publish bigger blocks.
You are confused. What you just wrote is exactly what the Figure shows; moving to the left on the horizontal axis represents faster propagation rates. Or just read the figure caption: "Improvements in the rate at which block solutions can be communicated to the other miners significantly decrease the cost of the attack."
This is not a problem. As network connectivity improves, both transaction fees (measured in BTC) and the cost of spam attacks is reduced. But that makes sense because the network is proportionally more able to handle the added TX volume. That's why the costs are lower in the first place!
The free market: it really does work
(If I am understanding this correctly) 
A consensus should bring confidence in price,,, one might think lol 