Putting my thoughts into words and posting publicly has had its intended effect. I've been rethinking about my idea, and realize that unfortunately the cons outweigh the pros. Putting the same app up in the store would lose all my reviews and history. I believe that at least some of the continued long tail sales success of Lexikon is based on the reviews and history. I could be wrong, some point to most app purchases being impulse based, but Lexikon is a tier 3 app, and that's when people start to do a bit more homework (and thus my support requests from people who obviously didn't read the app description have dropped to zero).
I haven't really escaped the position of being between a rock and a hard place. Though I think now I'm just going to have to charge head on, make my final update to this version, leave it on sale until development of the 3.0 version is done, and submit that as a new app
I think the game has been disrupted by the App Store and right now developers and the market haven't quite settled into what and how sustainable business works.