"Conversely, I think you're advocating the economy of scale when you suggest NASA pay for a lot of launches of water. Taylor addresses that too, and points out that it's a chicken-and-the-egg problem. There's no incentive to build infrastructure for mass production until the demand is there, and the demand won't be there until economies of scale reduce the cost."

I'm not advocating "a lot of launches of water". I think 100 ton total could enough to be significant, I think 200 tons would good. I think 1000 tons is probably too much, but wouldn't neccessarily say it's "harmful" or a neccessarily a waste of tax funds. If govt wanted to "try" a program which had a 50 ton max, in which they would review in say 1 or 2 years to expand or modify, I wouldn't think that was "unreasonable".
So let's say it's 200 tons- that's 200 million. It's pretty unlikely that all of this would "used" within 1 year, it might used up in say 3-4 years, so this would have governmental cost of around 50 million per year. This isn't "economy of scale". This money to encourage rocket development and improve rocket safety.
The second part of the plan would be to use this water (water in orbit), and evenually have the private sector pay for these water test payloads [pay for water delivery]. This second part is one step towards a larger goal of mining water in Space- and this was the reason I thought of idea in first place.

"I still think he's found one piece of string we could pull on to make the whole Gordian knot unravel. "

The risk of new launcher blowing up is the Gordian knot, but adding complexity to a rocket, probably wouldn't be worth the price. Though, maybe it might work for untested rockets- but I like my idea better:)