@teor
I think you are talking about a different network, which is not Tor as
currently designed, implemented, and deployed.
In particular, how do you get decent throughput, reliability, and low-
latency out of tens of thousands of devices?
This is an open research problem, which the Tor design does not solve.
Sorry for being thick-headed but
1. I do not see the connection between the latency and the number of relays. However many relays there are in the pool, there always will be 3 relays (or so) per circuit.
2. I also do not see the problem with throughput and latency. If the relay is small, it should be used in accordance with its capacity, which is reported in consensus. Many small relays should increase the probability of finding one that has spare bandwidth (my residential relay is, for example, idle 93% of the time despite having decent ultra-stable 153 KB/s bandwidth and static IP);
3. I do not see the problem of reliability. Reliability is easily measured and reported. The same relay is VERY reliable - totally stable for weeks, yet still under-used only because it is small.
4. I do not see why the current design of Tor prevents using more relays. I do not believe the current design is limited by design in the number of relays it can support.
I am sure that I am missing some deeper insights. What am I missing?