(a) ICAO allows each member to retain total sovereignity over its airspace
True, and the convention allows a state to deny recognition of foreign licences to its own nationals (I can't recall which article it is) but that is a very 20th century attitude to sovereignty which is arguably out of place in the 21st Century. Nationality, though, is an easy basis for excluding privileges if that is what you want to do: if you have a UK, Frence, Swedish etc passport then you can't use the licence in our airspace.
Unfortunatley for EASA, in the context of the global 21st century that would be a massive own goal, actually making it more difficult for your citizens to use a qualification than for jonny (non EU) foreigner to do so. Hence this dogs breakfast which piles cost onto everyone. The whole purpose of ICAO was of course to prevent exactly this sort of protectionist stance.
I don't believe that things will ever change fundamentally as micro managing every facet of human activity by detailed regulation is a European mindset. Their paranoia is fueled by a dislike of things Angl-Saxon in general and American in particular and this is compounded by the general economic success of the US and the UK (current recession not withstanding) as compared to negligible growth in the EU. For example, no one is more vexed than the French at the dominance of Anglo-Saxon law firms in the global legal market, driven mainly by the relatively few restrictions compared to the EU on how law firms practice and the fact that much of the global market works to Anglo-Saxon rules on doing business . Their remedy to this situation is not to deregulate their own professions but to try and impose restrictions on foreign firms trying to practice (fortunately without much success).