Why should an estate with $100K worth of appreciated assets pay no capital gains and no estate tax?

Right. I don't see why we need a step up basis at death. If you want to put it at $10,000 or something just to avoid a lot of paperwork for a de minimis tax loss, that'd be fine. But otherwise the tax basis of an asset should be whatever it was bought for, by whoever bought it.

The problem here is that the buyer is dead and knowledge of the basis may be lost. It could be written down in a safe place, but not known to estate's executor.

That was the historic reason, and it certainly had value. In the information age, I think we could consider requiring the recording of cost basic for assets purchased after some date. (The SEC started requiring brokerage firms to record cost basis a few years back, so we're on the way)