I'm the first to admit that my knowledge of the details of supersonic aerodynamics is spotty and sketchy, so I'd greatly appreciate being shown the curves that indicate this.
My understanding is that there's a spike of absolutely terrible coefficients, where everything goes kerflooey, around Mach 1--drag doubles, lift halves, and the control moments take a hike to the other end of the plane. Then above Mach 1 the bad numbers are indeed plummeting down, but they have a ways to go from the peak of badness. They meld in to a curve of more reasonable behavior at as I dimly already recalled around Mach 1.2-1.3 or so.
However, unless I am mistaken, they rise toward difficultly again beyond that point. They don't rise fast--a poorer lift/drag ratio at Mach 2 than Mach 1.4 is OK because it isn't 10/7s as bad but less than that, so the thrust requirement is not increased in proportion and so one does indeed get better thrust/mile figures. So it's not that the drag coefficient is actually dropping, it's that it rises slowly enough that the time saved because one is going faster more than offsets the fact that the aerodynamics are getting worse. One burns less fuel for a given distance than at the slower Mach speed.
But make no mistake, designing for the higher Mach speed is tough. The optimal shape for best performance at high speed imposes penalties on low-speed performance, and the contradiction gets sharper the faster one tries to go. Most important I believe, is the thermal problem. Shocked air gets hotter the faster one tries to go, and at Concorde-like speeds one is getting into the realm where traditional materials will not take it, therefore one has to develop a whole new materials basis, expensively, and even if the designs get accepted in a mass market and spread out the development cost the stuff--stainless steels, titanium, advanced ceramics--is inherently expensive.
Hence Wallis's early training wheel suggestion, design for just past the transonic zone of sheer awfulness, where shock heating is still within the range of working with traditional materials, where the aerodynamic forms are still within shouting distance of something that works well subsonic, where engine designs are not too far a stretch from what works subsonic.
Also this was the realm in which test planes and military designs of that generation were aiming to go, so pretty soon designers would have lots of hard data about real planes operating there. Real engines good enough for the military would be incrementally improved. And so on.
Well, you are underestimating the speed difference. The earliest jetliners accepted on the market, like the Boeing 707, actually went faster than is the standard today; Convair designs went well over Mach .9. Nowadays however a speed like Mach 0.8 is considered perfectly normal and some jets go slower than that. Apparently that's the economics of superior fuel consumption trumping getting there a bit sooner at work, which supports your point.
However, a Mach 1.25 plane is not just going at 5/4 the speed of a typical jetliner, but more like the square of that, around 50 percent faster! It would shave off a whole third of the transit time; on a very long flight, LA to Sydney, that's a whole lot of hours.
I quite agree, if the plane is going to wind up costing twice as much and burning a lot more fuel per mile, it won't be worth it. But what if the higher cost per unit of passenger/cargo capacity is only modestly higher, and the fuel costs are in the same ballpark as the subsonic jetliner? Then it would seem to me the airline that offered this capability on long transoceanic flights would be able to charge a modest premium and yet have waiting lists of customers climbing up on the ticket desks!
So it's all a matter of how much those margins can be lowered. I think it's a good bet that with design knowledge and know-how already developed by this date, such a design can be almost taken off the shelf.
This alt-history what-if seems more focused on WI the job had been done in the past, presumably in the 1950s or early 60s. I submit that then the dynamics would have been quite different; there would be less sobriety about achieving minimum costs per ton-mile and more about the cachet of being on the very cutting edge. Wallis's solution may have fallen between stools--too advanced to be easy to do, too modest to inspire enthusiasm. As it turned out, the more ambitious goals turned out to be biting off more than the industry could reasonably chew and even with improvements in engines, materials, and general aerodynamic knowledge, I still suspect that even now a new Concorde type plane capable of Mach 2 or more might still be ineconomic, let alone something as ambitious as what Boeing was going for. But Mach 1.5 or 1.6, certainly Mach 1.3--these ought to be doable in a competitive manner, and by that I mean the development and operating costs low enough so that the passenger would have to pay a lot less than 50 percent more in ticket costs to get there in 2/3 the time. And that should be viable.
Trying to map out how and when it could have worked out back in the early 60s--well, if a Mach 1.4 plane had been available to passengers in 1965, the whole jet industry might have been forced to go that way; Concorde and still more the 2707 might have seemed the obvious wave of the future. Then when the oil shocks hit, rather than abandon the relatively slow supersonics I think the pressure would be on to improve their engines and fine detailed aerodynamics to bring the fuel economy and noise down to something acceptable, because I don't think passengers would accept 2/3 the speed they were used to.
A Wallis-type modest supersonic plane might have been available long before even 1965 and locked in low supersonic as the minimum standard from the very beginning of the jet age. Then there would be constant incremental improvements, modest increases in speed masking dramatic improvements in materials and engines; the passenger would mainly be looking at "does it go a bit faster" but the airlines would be asking "is it cheaper per passenger/mile" and so both goals would advance slowly. Of course they should both be asking "do I roast in mid-flight" and "does it melt and fall down?" so a lot of what would be regulating the pace of improvement would be improving materials and cooling and so on. In fact there might be a long plateau where speeds hold at already achieved standards while the major thing changing is engine reliability, quiet, and efficiency, because the real barrier is the thermal thicket and making progress there is a matter of developing and integrating all kinds of stuff.
