... the alternative to my suggestion is likely to be airshows that become little more than slow fly pasts.
Alternatively, those who wish to use the public commons (in this instance, airspace) for private spectacle will need to pay for the costs of insuring against catastrophic consequences. That may prove commercially non-viable but, if so, that outcome isn't a regulatory problem. Rather the burden will appropriately fall on those who choose to attend airshows and are willing to pay the extra costs of increased insurance premiums likely to result from the Shoreham deaths, injury and damage.
It would be manifestly unfair to shift the increased costs to anyone else.