Free Internet or movies for people with status would be a great idea, and something that should be doable with RED, I think. I like that because I think it would help keep the focus on entertainment and would definitely appeal to the demographic they are targeting.
As for flying rewards, I am kind of torn. I know a lot of regional flyers like to earn points for segments, but selfishly I prefer miles since I mainly fly TAs. Perhaps they could do something like UA and keep track of miles and segments to determine status. I personally think it would be nice to be able to use miles for upgrades to first. I also am praying that they match, as I think that would bring over a lot of customers.
I would also like to see them somehow tie Virgin Atlantic into the whole system. I don't know how it would be possible for them to have any kind of lounge system otherwise. Virgin Atlantic shares lounges in several U.S. cities though.