(The only thing that needs to come back from orbit is the astronaut. The whole idea of reusable spacecraft is completely impractical, as weight is by far the biggest expense.)
I would imagine that the current limitations on doing something like this are related to the maximum weight a hot air balloon can lift, in addition to the untested physics and engineering of a mid-air space launch. Imagine if SpaceShipOne (which was launched at 13.3km) could be taken to 40km and then launched.
Perhaps someone with a better understanding of lighter-than-air lift physics could explain what the current limitations on this are.
If you want to not fall, you have to keep thrusting straight up, which obviously is not practical. The next best thing is to try to move sideways. Sideways fast enough that you clear the horizon before you hit the ground. You have to move fast enough that when you fall you miss the earth.
Moving that fast is pretty damn hard. Any rocket capable of doing it, even if it is already "up there" is going to be far to large to practically lift with a balloon.
So what you're saying is that there is an art, or rather, a knack to flying, and that the knack lies in learning how to throw yourself at the ground and miss?
And it wasn't even "just" a joke, finding out there was actually a grain of truth to that classic, I felt worth pointing it out.
You can boil the transportation cost function down to a single independent variable: flight rate. For low flight rates, the costs per flight are very high, and are dominated by the labor of the engineers who design and build the vehicles. For higher flight rates, the costs drop, and are dominated by the costs of the physical materials used to build the vehicles. And for the highest flight rates, the costs bottom out and are dominated by the cost of fuel. All current modes of transportation (cars, buses, trains, ships, and airliners) have their cost dominated by the fuel cost. Only space travel is the outlier. Why? Because we're throwing every vehicle away after a single use!
Not to mention, any launch vehicle must have a capsule able to withstand re-entry anyway, to handle high-velocity launch aborts, so you might as well use it for an actual reentry later.
And to answer your original question, you could conceivably survive reentry from orbital velocities using a very large ballute:
http://en.wikipedia.org/wiki/Ballute
But it would probably need to be so large as to be impractical.
All that extra weight means a much bigger rocket is needed to push it up, it means you've got far, far less payload, and you're still stuck in low earth orbit only.
Weight is so expensive I don't think the economics can ever pan out for reusable rockets.
Also, if the shuttle had actually been used as much as intended the cost wouldn't have been nearly as much.
Kind of like how most cars are cheap on a per-use basis, but it would be insane to use a formula-1 racecar as your daily driver.
That's basically the shuttle. In fact, it's worse. More like putting that F-1 engine in an 18-wheeler sized truck, only doing 2 trips to the grocery store per year, and having the ferrari racing team's engineers and mechanics rebuild the engine and replace the tires after every trip.
I find that difficult to believe, given the enormous extra weight that will be necessary.
Look at the Apollo rocket, with that teeny tiny capsule on top of that massive thing. The capsule was the only thing that came back, and that whole massive rocket was needed to push that little capsule to the moon.
Now add wings, landing gear, etc., to the capsule, and imagine how much bigger the Saturn V would have to be.
This isn't wishful thinking either -- both have already done some initial low altitude VTVL tests. Videos here:
http://www.engadget.com/2012/09/22/spacexs-grasshopper-verti...
http://www.blueorigin.com/updates/updates-2011-11-17-video-o...
A capsule is small and heavy, so it'll have enough inertia to push up the compression and hence reentry heat.
For parachute jump from orbit, first you'd want to dump as much of your velocity as possible while still being outside the thicker part of the atmosphere. You could do that with a retro rocket, or my favorite is a conductive tether tied to a resistive load. In the latter case you use the fact that you're moving through Earth's magnetic field which generates a current in a conductor that is at an angle to the magnetic flux. If you ground short that conductor then it pushes back against the flux much like a shorted motor pushes back against you trying to spin it when its terminals are shorted.
It is entirely unclear to me if you can dump enough energy that way but you can certainly dump quite a bit. Once you are into the upper atmosphere there are a variety of ideas from what are essentially streamers to hypersonic parachutes to slow you further.
If you can't dump enough energy then you won't be able to avoid being crisped by the heat generated by your re-entry shock wave.
The only things that need to come back are the astronauts.