I am pretty sure the mega damage vs number squish has more to do with binary calculations and nothing to do with the numbers floating on the screen.
The number of calculations a server/computer does for a character with 5000 strength vs 5 strength will be the same. Binary uses the same number of characters to record the number 5 as it does 5000.
look very similar after all
The only thing about the number of binary characters is that it has to be large enough to hold your biggest number. I think 11 digits was where the threat cap... uhh capped... so probably 11 binary characters.
The easy fix to expand the number of characters used by binary systems to allow larger numbers to function. But there is a major drawback, especially in a program such as wow.
I did some rough calculations on the difference between the number of iterations between a 11 character binary system and 13 character binary system and a model where the server is calculating 50 buff/debuffs/mechanics/etc for 25 players.
The threat cap thing has me thinking 11 is the current character number and using 13 characters based on the numerical escalation of damage from prior expansions to what they would need in a new expac. And as near as I can tell changing a 11 character binary system to a 13 digit binary system would require the system to process 106,040 "times" more calculations. And this would have to be done per whatever cycle wow calculates at.... not sure how the internal game clock works.
So yeah I can see why this is an issue blizzard would need to address. I can see how both mega numbers and the squish system could solve this, however each provide their own obstacles.
I believe the Number Squish is by far the most open to the community because they will still be able to do finite calculations, where as mega damage is more bulky and you cant really dissect after a certain point. If they do anything Im sure it will be the Squish, because that is what we are all used to.