I really like the idea of awarding grants to institutions based on aggregate performance, and then awarding funding within a department based on internal metrics.
Getting rid of some of the direct competition might make people more compelled to share thier ideas with one another as well.
I'm a college student thats looking into going down this path, and am pretty apalled about the ratio of cool stuff to playing the game that academics seem to have to endure.
I'm pretty sure I don't want to spend 80% of my time stressed out about grants and 20% actually doing work or teaching. Unless thats not what the reality is, but from the jaded sources I've read, that seems to be the case.
I totally agree with the problems of teaching, administrative duties, and grant applications getting in the way of research.
But I am interested in the concern you showed about people keeping their work secret due to funding applications. In the world of CS, there are so many conferences because people are compelled to share every small step of progress instead of keeping it to themselves awaiting a huge breakthrough.
Getting rid of some of the direct competition might make people more compelled to share thier ideas with one another as well.