Personally, I think the 2nd level serves purpose very well, you know what you are aiming at when you go there, I'd add further 2nd levels rather than reduce it down to a single pot, however, the general public just doesn't seem to get how domains were intended to work, just look at the number of UK only companies with a .com and the US seem to think .com is for them rather than using their country domains.
There is no benefit other than brand confusion if you don't own both .co.uk and .uk and shed loads of cash in the bank of a not for profit registry that is already cash rich if you do register the .co.uk and .uk
Perhaps Nominet ought to become for profit and convert us members into shareholders so we can all benefit from this cash windfall
The problem is that Nominet has already been hijacked, and the root-and-branch membership have been rendered pretty much powerless over the years, something they have to share the blame for because of ineffective action in the past. Barring a huge, almost devastating matter coming to light, it is unlikely anyone will be able to muster the wherewithal to unpick the setup as it now stands.