Has this actually been set in stone or is Gavin just pondering ideas?
I am trying to get consensus. The process will look like:
Get rough consensus. I need to write some code to find out what size blocks the current code can handle, but other than that I think we're close to rough consensus on the approach.
Note: Getting consensus that we actually need to change something NOW will be harder; it will be much easier to get consensus after we hit the 1MB blocksize limit and transaction fees spike up. It would be lovely to avoid that panic/pain.
Implement the change / Write a BIP (these happen at about the same time).
Submit a pull request, after code is reviewed pull it into the reference implementation.
... wait until there is a release containing the change...
... wait until supermajority of miners have upgraded to the new release...
Voila, the possibility of bigger blocks.