What criteria would you suggest to measure in an effort to make it clear that the FDA has >found the right balance between risk reduction and upside potential?

I don't think there's a good answer to that question, unfortunately. What we're doing now seems to be working for most people most of the time, but it'd be absurd to think there's no further room for optimization. And it seems unlikely that the best approach is more restrictive regulation, given that extremely-useful drugs are going undeveloped for decades.

So... that leaves more flexible regulation as a worthwhile approach going forward. I like the idea of making limited human trials easier to carry out and less costly in general.

Not OP, but it's certainly not by leaving drugs unapproved in the US that have been in wide use in Canada, England, Japan, etc for years (and in some cases decades). The incentives are so misaligned for the FDA that the bias for inaction is enormous.

I also find it a bit patronizing that a federal agency determines whether or not a drug they've deemed safe has enough upside potential for me. That's a value judgement I'd like to make for myself.

Sorry if this sounds harsh, but the FDA's inability to approve drugs inside of a decade has personally impacted me quite a bit.

Drug development is a conservative industry. Even with researchers/companies/FDA all doing their best to develop good treatments, there are still many drug failures due to efficacy or safety.

Being more lassiez faire is going to lead to direct harm of some patients. Is it a worthwhile takeoff vs potentially addressing some unmet need is a tough calculus.