Stephen, that's a straw-man argument. Nobody's arguing against VLANs. Paul's argument was that VLANs rendered shared subnets obsolete, and everybody else has been rebutting that. Not saying that VLANs shouldn't be used.
I believe shared VLANs for IXP interconnect are obsolete. Whether they get retired in favor of modern technology is another question, a business question. About a year and a half ago, I built something much like the alternative being discussed as a community service project; pseudo-wire services for VNIs (participants can encrypt or not depending on their need), and a shared L3 cloud with private ASN numbering to provide inter-participant IP connectivity and some shared transit. The fabric survives fiber cuts without any disruption in connectivity (I didn't get to spec the fiber paths, so there are some places where the "ring" collapses into a single fiber bundle); everyone's HIPAA and FERPA concerns were met at the design phase; user-visible problems have been few, and problem diagnosis has been simple. There aren't a lot of participants, so I didn't do much in the way of self-service automation for provisioning, but I can see where it would be fairly straightforward and nicely scalable. If I were back in the IXP business, building a distributed metro-area fabric, that's how I'd do it, and I'd invest in automated, self-service provisioning. There would be no shared VLAN. I predict that the network would be more reliable, and could be operated more cost-efficiently as a result.