My understanding of the purpose of WikiTree is not just one world tree, but one public world tree. In my experience, it's not reluctance to make a bio public that is a hindrance to a more open profile, but (1) not fully understanding the WT privacy system and (2) an attitude of ownership of a profile. I do not think the proposal, while well intentioned, addresses either of those. It is a lateral move that makes a complex system more complex, and I don't believe it will coax people into openess.
I understand the need, given the times and sensitivites, to keep information about living people private. That said, I think the mission of WT is incompatible with private information in a biography, particularly for the deceased. In my opinion, the solution is to exclude the sensitive information if it is in fact so sensitive. Not every fact about every person needs to be included. But I would also question hard how sensitive the information is. At some point, history is just history, the good and the bad.
After two years with WT, my protocol is private (living persons, and I only add them if I have their express permission), public bio/family tree (deceased with living nuclear relatives, bio limited to publicly available info, which is a lot more than people think), public (deceased with no living nuclear relatives, but for whom I feel I can add value by "moderating" the editing) and open (everyone else).
My two cents.
Thanks to all who think about these tough issues and make WT possible.