Although I have always liked the simplicity of Southwest's program, they have changed it quite a bit over the years. I think back fondly of the days you could take your award to the airport and board the plane if there was a seat on the plane. You could also physically give the award to someone and they could easily convert it to an award. However those days are long, long gone.
One positive side to these proposals is the elimination of capacity controls, and I would take it a step further and why not do away with blackout dates, if you are changing the program to basically a rebate on money spent on Southwest (and partners) to be used on goods or services on Southwest (and partners).
This proposed new system is in keeping with Southwest's keeping it simple policy, as it appears the redemption part is still easy, the complexity is in the accural of the points, and you could play the complexity to your advantage, like many already do with other programs here in Flyertalk.
By basing the cost of the award in points by the value of the ticket in both earning and spending Southwest might actually pick up added revenue for people anxious to get a "free" ticket. You might also pick a less desirable flight to get it for fewer points. I would hope that by eliminiating capacity control Southwest would be returning to the "if there is a seat on the plane, you can get it with an award ticket" way of thinking. If that is the case. having the cost of the ticket determine how many points you get for a trip is much easier to swallow. People who buy 16 one way $29 commuter flights to get a free transcontinental flight are going to have a much different opinion however.
One question I would have is what happens if you cancel your award travel. This has always been a huge advantage to Southwest where there are no fees to redeposit unused awards. Under the new plan would they allow you to redeposit at no fee any ticket you don't use?
What about a compromise to allow you to purchase with points, say up to a $500 non-expiring Southwest gift card that could be used to purchase tickets for the blackout periods. Naturally there would be a premium for this option, but this would be an option smiled upon by the "whales", or business travelers that Southwest is seeking. Since Southwest can't offer upgrades to first class, offering a way to make sure you get a free ticket when you need it (or want to send it to a son/daughter/parent for an emergency) might be the tipping point to send you to Southwest.
I think the writing is on the wall, there are going to be changes, and the price of the ticket is going to enter into the equasion. It must. It would not surprise me to see other airlines stop giving frequent flyer points for their lowest of the low discount tickets. Many are doing this now by not giving points toward elite status (which many seek more than the award miles) on deeply discounted fares.
On Delta you now have to pay a fuel surcharge on award travel. When you add ticketing fees for booking the ticket on the phone, and extra fees if you don't do it 21 days in advance, it is no longer a "free" ticket.
The programs are going to change in the future, that is a given, the only thing now to be decided is just how bad the changes are going to be for the traveler.
It will be interesting to see the frequent flyer programs of say, 2010 when there are only maybe three major airlines still in business due to mergers and forced liquidation. With so few airlines will the frequent flyer program go the way of green stamps at the grocery store and gas station of an earlier era?