A national sales tax in lieu of a flat income tax would be very nice for the reasons you stated. Every taxpayer will be reminded of the tax every time he makes a purchase; it's a good reminder for him to vote for small government. It would also encourage families to teach their children to be industrious and to save money.
But, it seems almost impossible because:
1. the advocates for the poor will cry foul over the regressive tax causing some poor to go hungry
2. the tax rate would be far above the magic 10% (you quoted from the Federalist), above which tax evasion will occur. Sales tax is already 7.25% in California state (which has "progressive" income tax around 10%), plus up to 1% county tax. Assuming the federal tax costs much more than state tax, the total sales tax on goods might come out to 40-70%.
I assumed that the government maintain the current revenues, all income taxes were abolished (supposing 10% for CA and 21% for federal income tax), and most people did not spend their entire incomes only on purchasing goods)
3. double taxation is nearly inevitable on finished goods, if some of the supplies used were already taxed.
4. tax-and-spend politicians in Congress would never allow it because it might ultimately reduce the amount of revenue they get to spend. There's no initiative/referendum process for citizens to change the IRS system, so the only way would be to elect supporters of abolishment of income tax. (and that's hard)
Food, utilities, basic clothing would be exempt. The poor would benefit greatly with a National Sales Tax - the bulk of their consumption is for these basic, exempted items...
Your #4 (above) says it all. Government is just too big and will not get any smaller unless drastic action is taken which is highly unlikely. But we can still dream, can't we?