First off, merry Christmas and happy holidays! I'm glad to have a courteous but vigorous disagreement on Slashdot.
Now, on to the other things: my point about regulation and social engineering is that yes, all laws have social consequences and thus are social engineering. But CAFE has historically worked in the exact opposite way from the way you are describing. You said "If people want big cars and you want to regulate them out of existence with safety as an excuse that is an extraordinarily different thing and you know it" -- but CAFE encouraged people to buy trucks and SUVs in ever *larger* numbers, not smaller, because CAFE made those larger vehicles *exempt* from fuel economy standards. Had they been included within its scope, OEMs would clearly not have sought to build such a high percentage of large vehicles, because there would have no CAFE tax advantage to doing so, and consumers would have been much less interested in this segment, because it would have been more expensive to buy a larger vehicle relative to a smaller vehicle. So my point was that people chose large vehicles in *artificially large numbers* because CAFE made those vehicles cheaper relative to smaller vehicles. Either all vehicles should have come under CAFE (my preference) or none (yours). But what happened was the worst of both worlds.
I disagree with your contention that it wasn't for the government to regulate fuel economy per se. You argue that people aren't interested in fuel economy, but you need some evidence to demonstrate this. I would say that (1) successive governments that suppored CAFE were elected, which is a reasonable sign that CAFE had support, and (2) all governments act on a broad range of areas, and outside of direct democracies like Switzerland (and frankly even there), we have to use representation rather than delegation to ensure our society functions, because there's too many important decisions to ask the voters' will on each of them.
Finally, we definitely don't have smarter pedestrians. All those cities have large numbers of clueless pedestrians including the dumb and also tourists who don't know the local rules. These cities are not less efficient than American cities at moving people round -- quite the opposite, they're typically much easier to traverse. And you're also missing a broader point. Take a typical suburban street: a row of houses either side of the road. There's a base level of mixing of cars and pedestrians in that scenario. But the street ccan be made safer for vulnerable users by design decisions such as road hump, tight corner radii, keeping the road narrow, decent lighting, and by policy decisions such as the UK HIghway Code's hierarchy of road users, which states that "those in charge of vehicles that can cause the greatest harm in the event of a collision bear the greatest responsibility to take care and reduce the danger they pose to others. This principle applies most strongly to drivers of large goods and passenger vehicles, vans/minibuses, cars/taxis and motorcycles" and goes on to say that in practice, this means cars should give way to pedestrians crossing the road (and we have no jaywalking rules here, either).
Anyway, if you ever come to the UK, ping me and I will take you out for a beer and show you around. Hopefully you'll see how enjoyable a big European city can be no matter what form of transport you use.