I sort of understand it myself, but not enough to comment with any such accuracy.

Have you thought about the connection issues? I mean like instead of TTL=51 and 5 connections, having TTL=1 and 255 connections, gnutellas size varies in the hundreds of thousands, can the average users system handle connecting to that many nodes at one time, what happens if several of these nodes send data at once, what happens to the bandwidth then? What about firewalls and routing in VPNs? And right now Gnutella allows you to specify the number of connections (where you connect to others) and the number of allowed connections (allow others to connect to you). If you look at limewires network size graphs...

http://www.limewire.com/index.jsp/size

You will see that around 1/8th accept incoming connections, that means if they connect to 8 hosts, they allow only 1 host to connect to them on average.