All that said, though, the question remains: if the TSA were to vanish overnight, what would take its place? What SHOULD take its place? These are not easy questions to answer--if they were, we'd be on that path by now, but instead the Kabuki dance that is this "security theater" gets more bizarre by the day. The reality is that certain fundamental questions of how best to address and ensure basic passenger safety without infringing on essential personal liberties remain unanswered, let alone the question of how to do it efficiently (both in terms of financial cost and human resources).
Why not let each airline (or alliance of airlines) decide what level of security screening to subject its own passengers to, conducted by itself or whichever party it hires to perform the job?
The beauty of such a system is that every airline wants to keep flying safe for its employees and the public, and prevent loss of expensive aircraft due to hijacking or explosives.
On the other hand, airlines don't want to anger passengers with wasteful security procedures that don't really help the main goal listed in the preceding paragraph.
And people talk. If one airline's security got too heavy-handed, it would probably see some loss of customers, including the high-paying business customers who don't want to deal with too much shit. That would seem to prevent a lot of abuses we see from the TSA right now.