Well, I think extending the block is not needed. Probably doing some kind of
cut-through is a better idea, especially in non-interactive way, but we can of course start with some interactive version to see how it will turn out in practice. Practically speaking, joining many transactions and applying cut-through on them will raise their satoshi per byte value, so effectively it will also give miners more coins per block while taking less space to store them. For now, I don't see any reasons to reject such cut-through by anyone. Thoughts?
The so-called "interactive" version of cut-through is just a stupid idea which actually is the original version, lol, and no, it doesn't help miners a bit because the interactive phase is done by the users involved in the chain to keep their own fees low, and it is why they'd engage in this "interaction".
As of non-interactive cut-through, I made a few comments in the original thread trying to convince the op, GM, about the possibilities, impacts, and a very special use-case: compressing the history, received negative feedback and insistence on the stupid version.
BTW, I liked your comment and proposed algorithm, but do your best to convince Gregory, and good luck with that.