I would have thought that there are a few safety and security implications in this proposal:
Safety.
If everyone is carrying their maximum allowed carry on baggage there is a possibility that in an accident or heavy landing that the bags could fall on top of the other passengers.
Security
It is one thing to scan hold baggage however the increase in large bags on an aircraft increases the possibility that weapons could be smuggled on board.
I am surprised the British Government D of T would welcome this proposal, but there again the Irish equivalent might agree to anything that Ryanair suggest.
I wonder if he has thought of changing to a "virtual airline"; for the price of a ticket he would promise to send a postcard home from anywhere in Europe. That way he needn't operate any aircraft, pay any landing fees or employ pilots.