Removing Complexity

Well, you certainly got my attention Col! There's a lot in your posting to digest so let me start with the last part of your posting.
It's not an accident that we refer to the 'art and science' of healthcare. Problem is, I think we're focussing too much on the science and not enough on the art. We're trying to control the detail and not spending enough time on the interactions between people and how those interactions can be facilitated by information systems. Again, I believe we're spending too much time on one side of the interaction - the clinicians and other members of the service provider team.
In a complex adaptive system people form their own self referenced groups and interact with one another for mutual benefit. There's a tension between standardisation and the natural tendency for people to change what they're doing to make things work easier and better. iPhone has a new application every day for people to try out, so why can't we make it that easy to use the electronic health record in our bulky huge health services? A lot of those applications are about health - exercise, medication reminders, vital sign monitoring, to name a few.
I agree with you that we're on the cusp of either a new way of thinking about information systems development and management in healthcare or we're in danger of digging deeper into a rat-hole (to quote you). Question is, what can we do about it?
 

What are we to do?  This is a very good question.  Of course when you have a 500 ton Gorilla sitting on your sofa perhaps the best tactic is to hope it goes away by itself.
 
A significant barrier to change is that much of the industry is vested in the complexity; the standards makers, the vendors, the consultants, those in power in the health authorities.  And perhaps (but unlikely) like no other industry the people cycle around between organization types taking the same ideas with them; reinforcing the structure.  If Internet email working in this manner you would need a large system to run the email clients, they would costs millions of dollars, the specifications would only be understood fully by 2 people, and your emails would only make it half way whereupon some person would have to print them out and fax them to the remainder of the hops; and we would still be arguing over the semantic format of an email address.  Perhaps a bad analogy.
 
Actually I think there is much that can be done. 
 
As Informaticians we have got to stop thinking we can model the entire health world; we can stop re-inventing everything in each jurisdiction; we could apply ourselves to “just good enough” models, those areas that will really make a difference in health outcomes.
 
As Buyers we need to be pragmatic about what we want; we need to look for "do-ability" in the solutions we buy (simplicity should be a quality of any tender); and we need to look for innovation rather than safely choosing the same old players that continue to lead us into complexity and high costs.
 
As standards makers we need to question the implementability of our work; how will the average programmer understand our specifications.  Producing massive specification tomes may make us look smart but we just end up looking silly when it never gets implemented.  Looking at the way IETF make standards, they look for interoperable implementations before they look for the specifications.  My experience as a health newbee was that we learnt much more about the health specifications from trying to build software than by reading the specifications.
 
And as vendors we need to harvest the industry for the approaches that might work in health.  I think companies like Google/Amazon/Facebook/etc have learnt how to build software that works with user communities, that in many respects they will never see; they have learnt how to make it easy to change that software and how to bring people towards it—how to enhance the network effect, if you will.  Health IT (well, mainstream health IT) seems a world away from what is going on in this space.  I have just found piece of Twitter software called TwetDeck.  It is able to consolidate the social information sources from services (stores of semantic information) likes Twitter, Facebook, LinkedIn, etc, into a simple UI.  It even does some semantic processing around person relationships.  You could imagine an EHR viewer which looked and worked like this might change the way we think about the care record.  And its free!  How does it work?  By using simple Internet-based APIs and simple representations of knowledge.  I'm not saying that the software is simple or easy to produce.  But what is happening with the Internet API (REST, Folkonomies, Microformats, etc) makes getting data from some source the easiest thing.  This means the engineers can spend the time on usability.  In the meantime we in the health arena are wondering why software vendors take years to engineer complex interchange formats, that requires Discharge Summaries to generate 500KB of XML, into their systems!
 
I think the path of change will be a long one--and in health maybe it will never happen.  However, I think the opportunity is going to be on the margins, in the areas that the mainstream health vendors don’t see as key (after all, who would have thought a simple Internet search engine would have changed the way we think about distributed information.  Perhaps a likely area might be personal health record, or community health, or consumer apps for the iPhone.  We are now entering a period where the generation of people who will be using healthcare services will have not known a time where they didn't interact with their friends via Facebook.  May be this is where the wave will come.