All the imagined catastrophic "side effects" that you are trying to construct won't make an impression on anyone who ever played something like Jumpgate and so knows that what I described - a space MMOG without time machine - works just fine in it's core and won't turn to dust with some thought-out modifications.
I have played widely acclaimed I-War2 which uses this kind of mechanics.
Despite having a lot of well-thought out SF fluff, Newtonian flight, and despite of being a decent game overall, it's individual elements don't click together in the exact manner I described which makes it simply unworthy of comparison with either of the Frontier games.
But I think it is not realistic after the expectations that were built up over the years to expect DB to come up with merely a polished up Frontier as E4. People expect more, and many expect an MMOG option.
If you define "more" as "less".
The "improvements" you propose would greatly impoverish the core gameplay, which I think should be enriched instead.
If a rehash of FE2/FFE would be cheap, then what about a rollback to something mid-way between FE2 and Elite adorned with prettier graphics? Oh, and MMO.
I, on the other hand, would like to see more than a rehash, I would like FE2/FFE as if it was made today, with today technology and storage capacity. A living, breathing universe that could not be created at the time, but resting on the same core philosophy, which I believe is fitting for a damn sequel.
If we knew what Frontier Developments have in mind, it would be so much easier to play with open cards here in the forum.
That would be helpful, no doubt.
Could be balanced down to 15-20 seconds. Or anything in between. Balance should be: not annoyingly long and not annoyingly quick and easy.
Could not. Not without scaling the systems down, screwing up the Newtonian flight mechanics, or making already powerful thrusters downright ridiculous.
In the present reality. Not in a fictional game set in the distant future with hyperspace, jumpgates and / or FTL-Drive and after space exploring generations left their artifacts in space and the Thargoids invaded the galaxy and can lurk round every corner.
No matter what technology you have, if you can't create matter from nothing or import it from outside of the universe, or collapse the universe to a fraction of it's original size you're stuck with only so much matter being in the universe - about 10^-15g/km3 on average which means one and a half Panther (with it's old, badly adjusted mass) per cubic AU
if you dismantle all the planets, stars and generally everything there is in the universe to make Panthers out of it. With some metaversal technology, on the other hand, you wouldn't be stuck with vessels flying around doing pew-pew with lasers as they do in the Elite series - you would have Dukaj's "Perfect Imperfection" styled setting where "the universes are bullets, the number of dimensions are the caliber, the speed of light is gun-powder." - about as similar to the Elite universe as Elite universe is to this of Mount and Blade.
Of course, the exact numbers are irrelevant, but the main point is that space is either massively empty or not space-like at all.
In such a game changing the route inevitably leads to mission failure.
Not necessarily, it depends on many factors, like deadlines and such, but it is likely. Even if it was certain, it would make for a good dilemma, main question being "is it worth it?".
Pardon, perhaps it is my imperfect English, but what jumpgate-related problem exactly would be worse with FTL and non-existing without? Space between jumpgates being big enough to allow piracy can be balanced in a game with FTL as well. It is also possible to chase someone through jumpgates. And remember, with another ship in range or without having built up enough Newtonian speed FTL could not be engaged anyway. In Jumpgate, after activating a jumpgate the speed is reduced to zero and must be built up again after the jump. Jumpgates should not be apart to the extent that engaging FTL between them would be possible or make sense.
You answered your own question.
In a game using time compression, even a system criss-crossed by jumpgate routes allows for >1h flight time between a jumpgate entry/exit and nearby point of interest. Hell, in case of system like Alioth, it could very well take you over a day, as you could cover 15-45 AU using jumpgate then navigate the Alioth 4's satellite system 0.6AU across on your own.
In a game with FTL, said FTL has to allow for crossing the distances of the order of tens of AU if this game is set up in the same universe as Elite and it's sequels. 50AU is about 6 light hours, and you would probably like it to be like 5 minutes tops, so it gives us 72c. The problem is that for distances within 1AU - radius of Earth's orbit and much more than any distance between an orbital jumpgate and nearby point of interest, the maximum arrival time is less than 7s, so there is no possibility for reasonably explained piracy, unless you hit the subject with sufficient amount of fridges and wave your hands extensively to make the problem go away.
The beauty of time compression is that no matter the distances, accelerations and times involved it works because it can be adjusted freely, as it has no effect on mechanics, since it scales the passage of time in general, not specifically the passage of time spent on travel.
Finally, the main problem with your design philosophy is that it is the exact design philosophy that leads to soulless, mind numbing games of today, evidently designed by committees of suits.
The game is not a set of equations that has to be balanced out. All the variables in this set do not hang in vacuum. A game is an adventure and a world. All the variables and their relationships are merely a representation of something in this world or an aspect of this adventure. If you alter any of them, you alter this world, so you may very well come up with a "perfect" solution, corresponding to a perfectly balanced game that sucks horribly by making no sense whatsoever.
The right approach is to design a consistent and interesting universe, within it a consistent and interesting adventure, then use the equations to fine tune the stuff within the context of the universe and it's limitations, not just stretch and squeeze this universe to fit your equations as if it was silly putty or some other plasticine.