Of course the protocol is versatile.  That's why it is implemented with scripting.  There's a reason why transaction replacement was turned off you know.  Complexity adds risk.

If you want to elaborate on your theories about how transaction replacement will act as a cure-all which facilitates the dreams of everyone's skittles, SD bet, and goat cheese sale the world over, I'd listen.

Else I'm happy just to correct the mis-conception that I see a 'show stopper' in a modest block-size limiting the potential of the Bitcoin solution.  It's just the opposite in fact...I suspect that it will be the main thing which could save it.

lol
That's probably not the thread for it but I basically see the future of Bitcoin neither in mining supernodes (which would kinda centralize Bitcoin) and also not in some kind of probabilistic transaction verification (i.e. not every node has to receive/verify all transactions, as long as you can make guarantees about "enough" nodes having verified each subset). These would be two alternative solutions to the blockchain scalability problem. I believe we'll have payment services that can be completely untrusted but act as a brokers between their users. Every user of such a service would have a certain amount "locked in" for say a month. Locked in means that they agreed (without any risk) on a pair of transactions which cancel each other out unless they get replaced before the month is over. By sending the service a replacement version of the reverse transaction that does not pay the user back the full amount you can effectively pay something to the service in a secure and instant fashion without having to use the blockchain. You can also use this mechanism to settle bills with other users of the same payment service in a similar way and everybody can do a million micro-transactions without ever needing to do more than two transactions per month in the blockchain (the rest ist P2P, out of band).
Another intriguing idea is the ultimate blockchain compression which would also solve the blockchain scalability problem.

I apologize if I misunderstood you or came across as harsh, I just happen to see Bitcoin's main problems not on the technical level. I don't pretend to know the best solution to each and every shortcoming of the current implementation but I have yet to hear about a single one that's not being actively thought about and where I can't see at least a few convincing proposals to remedy the problem.

personally, i think it would less disruptive to the current monetary system if we could preserve the fiat overlay.  from day 1, i've always thought that Bitcoin could be used as world reserve standard; a gold standard if you will.  it would be a throwback to the old system we had prior to 1971 but digital.  it could ideally take the place that gold once held and perform a nightly digital balance of payment system between countries.  it would be fast, quick, and highly efficient and would prevent countries from issuing too much fiat or debt.

in that sense, Bitcoin would not have to change it's block size or increase it's complexity as it would be used mainly for very large transactions according to the above model.  yes, each Bitcoin would be worth an exorbitant amount as a result but hey, you have to think big and this would be the cost that the fiat money pushers would have to pay to preserve their corrupt system.  we can either take it from them forcefully or they can opt to work with a disruptive new technological system.  this concept is not unheard of as many gold bugs have recommended exactly this but using gold.  

it would be an enormous transfer of wealth to Bitcoin holders.  but again, those of us who were early adopters and contributed time, money, effort, talent, intellect, and hardware to growing this system deserve to reap the benefits.

but who's going to support their chain?  the reason ppl are buying into Bitcoin is b/c it has the right mix of principles that the average person can relate to and is happy with.

can you imagine what type of principles governing their chain that the gov't would come up with?  probably something like a Ripple where the originators get to keep 20% of the original coin, lol.  what a farce.  that's why i'm not a fan of Ripple and would never support it.  chains have to support the majority of participants, not just the interests of a few.

might as well just stick with the current fiat system then.  why bother with a chain?

problem with either system the gov't enforces, ppl don't like it and will look to alternatives.

The main reason to start one's own blockchain would be to exercise control (in the ways you mention.)  But the main thing that will build user faith in a blockchain is that nobody can exercise control.  It brings a smile to my face to think about the aggravation this corundum might cause to control freaks.

I project that Bitcoin will enjoy a lead as long as nobody can gain control.  And again, keeping it tight and accessible to a large number of potential operators is one of the reasons why I am so fixated on the block size issue.

Again also I had not understood Bitcoin sufficiently to recognize this small block size 'shortcoming' (or more accurately, how difficult it would be to 'rectify' it) and thus Bitcoin did not strike me as a suitable solution to act as a nearly perpetual backing store until fairly recently.

But if govcoin is required for taxes, won't it be a Gresham's law situation where the crapcoin is circulated while bitcoin is used for savings?

The eventuality for Ripple should be no different from what exists with Bitcoin now - large balances held by the originators (or assumed to be early adopters in Bitcoin). It'll be functionally decentralized with an equivalent level of adoption as Bitcoin has. Of course, the server source remains to be seen, but the concept is strong.

What we are seeing now is a constant reminder that early adopters gonna redistribute their coins at  discounted prices periodically.