This CFR scenario has not only been gossipped about, but also spelled out explicity by the CFR itself. It's all in this pdf file.
EXCERPT:
WHAT WE SHOULD DO BY 2010 • Lay the groundwork for the freer flow of people within North America. The three governments should commit themselves to the long-term goal of dramatically diminishing the need for the current intensity of the governments’ physical control of cross-border traffic, travel, and trade within North America. A long-term goal for a North American border action plan should be joint screening of travelers from third countries at their first point of entry into North America and the elimination of most controls over the temporary movement of these travelers within North America.
http://www.cfr.org/content/publications/attachments/NorthAmerica_TF_final.pdf