The problems as I see them are: there is so much fat already in a flexible system that upward spikes are not critical. Short term targets maintain a sense of urgency and complement rapid technology change. Lastly this system is too puzzling to sell to the public.

Suppose the aluminium smelters face losing business to Guzbekistan or wherever. They can quickly get more of the quota say by offering rewards to households for a few percent household electricity reduction. That could avoid a carbon price spike and should hasten internal technology improvements. If anything the European debacle shows price floors may be more needed than carbon price ceilings.

Five year blocks (say) could see technical innovations ignored while lobbyists regroup to stymie the next round of cuts. Targets should reduce year by year like an unstoppable slow moving train. Big polluters should know there is no point going begging to Canberra because they will get no sympathy

Its a soothing refrain: "..setting long-term goals for emissions, with the precise timing of cuts being based on smoothing the costs of emission reduction." In principle i have no problem with this, but in practise i agree with Taswegian, there is too much wiggle room, and also think Mr McKibbens means seem awkward to his ends.

If avoiding Industry pressure on politicians to bale out/providing market certainty is one paired goal, then a set-in-stone long term target with a entirely known annual reductions (2%/yr? amendable by science not politics) will serve that better than five year plans and diverse entitlements. There will be ample opportunity for business in the inevitable plea bargaining for subsidy/ concession/ exemption/ phase-in, this is unavoidable and can be played out in party politics, under the avoiding-catastrophe certainty that cap&contract provides. But if nothing is certain or set (except 2050 target), we'll have the same inequitable fiasco as seen in trade deregulation ("you first", said the yanks and euros, "we'll get in later...", 30 years ago).

I applaud Mr McKibben for supporting carbon trading at household level (if i understood above correctly), and would welcome his perspective on Tradeable Energy Quotas http://www.carbonequity.info/rationingidea.html
http://www.feasta.org/documents/energy/dtqsoct2003.htm
as the UK is considering
http://www.abc.net.au/rn/scienceshow/stories/2006/1772097.htm
You did mention wanting a system that meshes with other countries.

Last, WMs article makes a handsome contrast with Mark LAwsons latest emotive and smear-filled efort.
http://www.onlineopinion.com.au/view.asp?article=5943
Good-cop bad-cop or not, its working on me.

What a waste of time, now that it is becoming apparent that there
are not enough fossil fuels to cause the end of century temperature
rise that was predicted by the IPCC committee.
The IPCC assumed an increasing supply of fossil fuel. Splat !