>> Individuals are the entities that make decisions,
The fundamental problem here is that most individuals don't want anything to do with managing trust. In fact it's not even that, it's that they don't know what trust means, they have no interest in learning and many of them are not even capable of doing so.
The problem that TLS and the authority system try to solve is "how do I set up a secure, trusted connection between two parties who have never met, one of whom has probably never even heard of a key pair". Individually managed trust graphs don't really help there. AFAICT.
>> any emergent authority that violates the trust of those individuals gets booted by enough they cease to be an authority.
Absolutely. But any system should be examined with game theory in mind, and I don't see that web-of-trust is necessarily immune, nor do I see that it pre-empts the kind of problem we see here - trusted parties acting badly for money/legal/government reasons.
I may be wrong, and would actually quite like to be.