Hi Mark,
As actually someone who was at that table you are referring to - I must say that MPLS was never proposed as replacement for IP.
MPLS was since day one proposed as enabler for services originally L3VPNs and RSVP-TE. Then bunch of others jumped on the same encapsulation train. If at that very time GSR would be able to do right GRE encapsulation at line rate in all of its engines MPLS for transport would never take off. As service demux - sure but this is completely separate.
But since at that time shipping hardware could not do the right encapsulation and since SPs were looking for more revenue and new way to move ATM and FR customers to IP backbones L3VPN was proposed which really required to hide the service addresses from anyone's core. So some form of encapsulation was a MUST. Hence tag switching then mpls switching was rolled out.
So I think Ohta-san's point is about scalability services not flat underlay RIB and FIB sizes. Many years ago we had requests to support 5M L3VPN routes while underlay was just 500K IPv4.
Last - when I originally discussed just plain MPLS with customers with single application of hierarchical routing (no BGP in the core) frankly no one was interested. Till L3VPN arrived which was game changer and run for new revenue streams ...
Best,
R.