Back to the matter at hand: It seems that initially at least, the system works. Bag sizes and carry-on limits exist for a reason. The fact is, however, that punitive checked luggage fees encourage some passengers to try to game the system. That behaviour is expected from a small fraction of the public. Attention should be paid to airline policies that promote it.
Eventually airlines will force the hands of the regulators, as they do in most things. Minimum seat width and pitch will likely have to be mandated...to at least the 95th percentile. Perhaps a rebate scheme could be employed for people outside of that standard. Its only fair, after all.
I would like to see 476mm/19" width and 34" pitch for long haul and perhaps 32" for short haul under three hours. 30" maybe if recline mechanisms are locked out*
{*I am a fairly tall bloke, and dislike being assaulted by an insistent recliner. Usually a whispered promise of retributive violence does the trick. Why should it have to come to that? Garrotte just one person and you never hear the end of it.
}
If such standards were universal then fares would drift up slightly to compensate and air travel would again be something to enjoy rather than dread. Or at least tolerate in semi-comfort.
The missing two rows of seats would then instantly increase the available carry-on space to what it was when the aeroplane was designed, magically fixing the problems mentioned above.