" There seems to be this attitude out there that pot is harmless, and that's just not the case in my experience. In moderation, it's probably safe. But chronic use- long term use at high doses- seems to really fuck people up."
Replace pot with Alcohol, cigarettes, HFC's, video games, etc. and its pretty much the same thing. How far can it swing in the other direction? You mentioned alcohol has bad long term effects. But despite this people still drink themselves to death, drive drunk and kill others or get killed, or become a raging ass holes causing mayhem. People still smoke cigarettes despite the exorbitant cost and adverse health effects including cancer. People still drink gallons of soda and sugar crap until their pancreas packs it in and shuts down. People play video games until they loose their jobs, wives, kids and home or in some cases, until they drop dead. There is nothing the government can do at that point other than prohibit it these things and we all know how that works out. It's either all with some restrictions (don't drive and you must be 18 years old).
The people have to be the ones to use judgement. If someone smokes so much weed and they fry their brains then that is their fault. Just like the old 65yo blue collar retiree who spends every night at the bar downing 6+ pints until his liver fails (know a guy who this just happened to. sad). People have to be educated and they have to be smart.
Oh and I can counter your burn out pot head story with an anecdote of my own: I have a friend who at one point worked two jobs and got a degree at the same time. I asked him how he did it his answer was "Copious amounts of marijuana bro." He smokes in the morning, on his way to work while at work and at home. He is very energetic, driven and lively. Quite the opposite of your theory. So it of course depends on the person.
I have also known people who smoked a lot and were fucked up because they were fucked up to begin with. You just always assumed they were messed up because of the pot but meanwhile you never really knew them well enough and they were messed up in the head to begin with. I worked with a kid who would go berserk is he didn't smoke and he smoked all the time. If he drank he was VIOLENT. A night out with him meant he was going to get into a fight and usually win because he was a hulk of a man. Turns out his father was exposed to chemical warfare agents while in nam and had a lot of mental issues including PTSD. His father ambushed him and his mother with a knife thinking they were Vietcong which promptly ended that marriage. He also had a very dysfunctional life and had a lot of really fucked up friends (I mean what friend tells you to fuck their own mother because she thinks your cute and lets you actually follow through? Yea, those were his friends. They gave me the heebie jeebies). The smoking was probably medicating him.
In the end legalizing it will create new problems but they will be far more petty than what we have today. We can rid ourselves of a large amount of violent crime, people in jail and money spent on ruining lives while fattening the wallets of war machine peddlers. I'd rather live in a world full of cheery burnouts than drug gangs chopping peoples heads off with box cutters and chain saws, prisons bursting at the seams with inmates who just become more angry and make plenty of angry new friends they can do business with once they get out and government paramilitary goons wielding surplus military hardware shooting first and asking questions later (oops! no drugs here. Sorry for shooting your dog and father, kids. Have a nice life!). Legalize it, please.