Mike, this proposal was purposefully constructed to maintain as well as possible the semantics of Satoshi's original construction. Higher sequence numbers -- chronologically later transactions -- are able to hit the chain earlier, and therefore it can be reasonably argued will be selected by miners before the later transactions mature. Did I fail in some way to capture that original intent?

Right, but the original protocol allowed for e.g. millions of revisions of the transaction, hence for high frequency trading (that's actually how Satoshi originally explained it to me - as a way to do HFT - back then the channel concept didn't exist).

As you point out, with a careful construction of channels you should only need to bump the sequence number when the channel reverses direction. If your app only needs to do that rarely, it's a fine approach.And your proposal does sounds better than sequence numbers being useless like at the moment. I'm just wondering if we can get back to the original somehow or at least leave a path open to it, as it seems to be a superset of all other proposals, features-wise.