Skyjob,
A well written post, but I respectfully disagree with your conclusion:
Thus DECs are reducing the training time requirement/capacity by the time/capability required for converting SFOs.
The last batch of DECs in 2012 took an average of 5.5 months from joining to line check. They do the full conversion (same as new hire) then the full upgrade (same as SFO) then all the add-ons (freighter, polar etc).
A new hire to FO takes around 2.5 months and an FO to CMD upgrade takes approx 2.5 months as well.
Therefore, there is no training or financial benefit in DECs.
Problems such as lack of Sim time and instructors can be offset with outsourcing (which is already announced as happening to a large extent in 2015).
Probably the only insurmountable argument for DECs is a lack of suitable candidates (FOs) for upgrade. This has happened at times in the past, but there is a long queue of suitable 777 and 330 FOs with all the requirements waiting for a letter at the moment.