Hi Steve,
Is it possible that along with the sequence number, we also increase the SPI space so that we can use some of the SPI space for NAT translation. We could keep the original restrictions on how to pick an SA, or we need to come up with elaborate schemes to effectively increase the SPI space, like you are attempting to increase the sequence number.
How does the transition happen? If the new ESP ID is placing additional restrictions that did not exist originally I think it is fair to ask the new ID to accomidate NAT traversal by increasing the SPI space. It's like shutting off all the doors for us.
You bring up another good point about multicast. Frankly, I haven't thought about it. I'll have to look at this and get back to you and the list.