1. Since the master-block is changed at the same time a new block was found, it cannot be secured by mining. The changes in the master-block completely depend on the 10000 aged block, which was secured before. So the master-block is as secure as the today's blockchain and has to be downloaded the same way at the first time.
If UTXO stores only the balances of any wallet, yes, such a master-block would be just a manifestation of it. (I'm not a pro, so I don't exactly know what is in the UTXO)
2. No one needs the entire chain anymore. After the update, the wallet-balances of block 1 to 360000 (today) will be consolidated in the new master-block. New users only need to download the master-block instead of the entire chain.
Then we have two blocks to process, everytime a new block comes in.
-Incoming (classic) blocks are added to the remaining “10000-chain” the old way.
-The changing balances from the “10001-block” are added to the master-block. After that the “10001-block” will be simply deleted.
3. Let the master-block become 10 GB! Anyway better than Tbs of blockchains in every node.
In regard to number two, you may have misunderstood my question. Say I'm a brand new node without a blockchain, and I want to sync and verify. What data will my node receive, and how will it verify that the current chain of 10k is both derived from the Genesis block, and is a valid chain? How will I verify the master block's validity as well? As I understand, the master block is constructed by processing blocks that are exiting the 10k window. That means that the nodes that need to recreate or verify it will need all old blocks that nobody has anymore, in order to actually from their copy of the master block.