I don't think the scalability is as much of an issue as you think. The current system allows a trusted CA (or untrusted if you are OK with warnings) to issue a

I don't think the scalability is as much of an issue as you think. The current system allows a trusted CA (or untrusted if you are OK with warnings) to issue a cert to a malicious party for, say, facebook.com. This means that in aggregate it is difficult to trust the reliability of a cert that a browser receives. The strength of the Sovereign Key is that once facebook.com issues a Sovereign Key, no one can possibly produce a key that is valid for facebook.com unless facebook.com revokes its key, which is a cryptographically secure process that only facebook.com can perform using its private key. This largely alleviates the problem you describe. One can be relatively lax in distributing new sovereign keys, because there is no way to attack an existing one by granting another. One still has to be a little careful in granting them because a site without a sovereign key might be attacked by creating one in its name controlled by a malicious third party, but it's not as dangerous as the current system where granting an overly broad certificate to Joe Schmo can compromise google.com's SSL.