> An additional advantage of a system like this is the OTP can be encrypted so if it is captured it can't be used to decrypt old messages without further getting key material from the end user (possibly with a pipe wrench).

That problem has already been solved and the websites you visit today (should!) be working the same way:

https://en.wikipedia.org/wiki/Forward_secrecy

> the key distribution problem

That is the hardest problem, especially in a system where you've got military units in unfriendly areas.