crossing into the surreal...
Safety devices such as FLARM need to be justified on a cost/benefit analysis. While it may be a wonderful thing for glider competitions, I cannot see how or why every object above the size of a garden gnome would ever end up with a transponder to assist flight crew avoid what should normally be avoided by the general flight rules. The rules occasionally don't catch all situations, however what do the proponents of a vast active transponder system fitted to inanimate objects propose to do in the case of a single transponde failure occurring in the morass of object d'art covered in electronics, presumably paid for by, well no one I can think of. I would probably object to having to install additional electronics on the outside of Big Ben, to accomodate an aerial service which has issues on occasions. My GPS's on the Navajo, mixmaster and my helicopter have obstacle data bases, rather more simple system than installing active electronics on every building above the London underground. Heck, go buy a Garmin Aera, and add your obstacles into the DB at your leisure.... it would be as reliable at managing 10,000 or more obstacles in the greater London area as that many fixed transponders. Out of interest, what is the max target density for FLARM before it collapses? I recall looking at that for the TCAS implementation in the 80's, don't suspect the situation is much different, unless the frequency is in radar ranges. If you are only proposing transponders on a small number of specific obstacles, then the granularity is probably not different to the GPS obstacle data base.
It's hard enough getting TCAS and EGPWS or GPWS to be followed due to the persistence of crew inertia to warnings with any level of false events; I barely get above 300AGL in much operation around some cities (legal for the state...) and the map is normally all red anyway with terrain & obstacles... Operating around the city in normal conditions would result in continuous alerts (as of course does the TDB on the GPS systems). The operator becomes inured to continuous alerts and warnings, and additional procedural training has to be conducted to ensure that an alert that is ignored in some cases is reacted to in others. Oddly enough the same outcome can be obtained in general by knowing what your LSALT is and popping up above LSALT when inadvertent IMC, presuming that the aircraft and the piot is IFR qualified. On helicopters, that is not all that common of course. Transitioning to IMC in a helicopter is far more fun than in a fixed wing, and icing is a factor to be considered before hard IMC in cool climates.