Over the years, I have read quite a bit about state vs. federal rights. Many of the founding fathers envisioned a low-key federal government as you have described. THe state governments would be making most of the big decisions.
As well, the founding fathers envisioned non-partisan elections. But for some reason, this departure from the American constitution has been ignored in most historical analyses.
While we should try to devolve government to the lowest practical level, I don't see any God-given philosophy that authority and responsibility must belong at this level and not at that level. We could make a lot of argument for either case as to which level is better.
And we could also acknowledge that "better" is often not the criteria to decide one level or another. Far too often, the decision was more based on power than common sense. In other ways, local powers fought over far-away powers for a certain "right," just they wanted control.
And we should acknowledge that the current state boundaries were drawn by wise men. Today, New York City could be its own state. California would be more governable with three separate states. Washington and Oregon could have separate western and eastern halves. Michigan could divide into two.
Remember, the Dakota Territory was divided into two states mostly because the Republicans wanted the extra senators. These power games have been played for a long time.
Another elephant in the room is that American municipalities basically have no rights. Whatever they do have is governed by their state legislature--and can be taken away at any time.
So if we were to state rights in the other direction, why not? For example if Philadelphia wants to issue gay marriage licenses, why should Pennsylvania deny this city from doing so?
In essence, I do not see state rights as the solution.
USA has a big rural and urban divide. This will not go away with state rights.
-------------------------
I believe the TDG will evolve into a unitarian system of governments. Rights to the lower levels of government will come and go as needed, including right down to neighborhoods.
The highest tier of the TDG will not be tied to its own ego or desire to control everyone else. The TDG will shed the power-accumulation instinct many of us seem to have.