None of this answers my question: how are the scaling issues facing the ETH blockchain insurmountable, when Bitcoins can be easily solved with big blocks and client optimization?
this gets super technical, but it seems to me like optimising the eth-virtual-machine is magnitudes more complex than optimising the processing of ledger-entries
THe optimizations have nothing to do with what is stored in the blockchain. ETH's virtual machine is as optimized as any virtual computing environment out there.
The optimizations come in the form of data propagation, node processing speeds (sw optimz, hw utilization, etc). The scaling issue is w/ PoW blockchains, not their particular contents.
The issue really comes down to the sheer amount of data that must be stored on-chain. Moving and processing lots of data is slow, whether it's a ledger or state of a virtual machine.
data propagation is common to both, so it is irrelevant to the comparison. VM is the critical difference; Ethereum's TX processing single threaded & heavy because of it