Andy: My second version of the TDG (in 2004) was an attempt to base the idea on research. Except I could not find much in modern times.
I did run across a paper where a rural area in England used to have the system you more or less described. The paper was critical of this system because voter turnouts were low--and campaigns were not based on any issues. So the two-tier system was abandoned circa 1980 in favor of the American "strong-mayor" electoral structure. The paper never mentioned if governance was better (or perceived to be better) or even if voter turnout increased. But the writers seemed happy that democracy was improved with this change.
There wasn't a lot examples with "tiered democracy" that I could find. But maybe it still exists in England. If you have more information.
In the third version (2009) of the TDG, I threw out all the academic references. They really weren't making my case.
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As per your suggestions, I too find them romantic and optimistic. I'm not really much into "wishful thinking". The TDG is about working towards a certain goal. The early TDG builders may not realize that goal, but the possible reward is so much greater than effort expended, that logic suggests people should build it.