Thanks for sketching this out.
Realistically, most don’t exercise their options at all, because they don’t have $100K to buy them with. They convert + sell as part of some trigger — like an acquisition.
The other key part of course is the “defer taxes until you sell”, which is crucial for regular old employee upside.
From Todd Smith, who actually did the math:
FYI — Here, I’ve charted the actual math: http://bit.ly/1NYz5PW on $10,000 stock gains, closing the loophole means ~$1,100–1,400 in additional taxes… regardless of which tax bracket someone is in.
So… this is a non-issue.