That said, I find the wording of dedicated counter space a bit bizarre. There are only 128 bits per block in AES - in fact I'm not aware of a widely deployed cipher which a larger block size. Whatever goes through ghash becomes the initial plaintext passed to aes under the key (this is the counter) part and then you just increment. This is just a limitation of counter mode in general: the whole IV is technically counter space and is treated as whole when evaluating the birthday bound issue.
The critical part mentioned in the post is that XChaCha "hashes the key+nonce into a fresh key". A very similar technique is used un: AES-GCM-SIV (https://datatracker.ietf.org/doc/html/rfc8452#section-9). The improved security here comes not from any "counter space" or nonce extension per se but the fact that changing the IV changes the effective key used in the block primitive (i.e. the raw aes-encrypt function) as well as the first block of plaintext fed to AES by deriving these from nonce+key.
So I guess this is asking for a somewhat different construction. Personally aside from the fact it is already widely deployed I'm not sure I'd keep GHASH.
> The AEADs defined in this document calculate fresh AES keys for each nonce.
I guess write an RFC for extended nonce only?
So yes, using GCM with a 128-bit random nonce is already good enough for most of these cases.
However IMO all of this is a distraction anyway. One of the most devastating real-world attacks involving nonce reuse was the KRACK attacks, and that involved a protocol error allowing the attacker to force nonce reuse. No amount of extra large random nonces would have saved from that. (And using random nonces in such a protocol significantly bloats the wire format).
What we really need to do is move away from hugely fragile polynomial MACs. For 90%+ of usecases a more robust PRF is perfectly performant enough - eg note that the impact of KRACK was less severe against CCM than GCM. Heck, even CTR/CBC+HMAC is perfectly fast enough for many use-cases. Stop with the premature optimisation already.