There's a lot more to designing a UI for this than just changing the icon. For example, when you type "foo.com" into the address bar, browsers generally default to "http://foo.com" instead of "https://foo.com." And, consequently, browsers tend to show "http://foo.com" as "foo.com" to suggest that you don't need to type the "http://" part. All of that needs to change to become a lot smarter in order for this type of idea to succeed. However, it doesn't seem completely unreasonable to consider making all those changes. In fact, I think these changes should be a high priority for browsers makers.
tl;dr: I suggest people brainstorm ways to improve upon the idea to make it workable, instead of trying to shoot it down.
If it goes ahead with certificate"less" https by default i'd wonder if they would use that icon for https websites which dont have a certificate ;)
If you draw people's attention to something that isn't seriously important, then those times when the whole screen sends a warning you go, "oh well, I had that red warning going all along and it didn't matter, so why do I care?"
I am saying that by pushing a warning where it's not necessary, you diminish the value of any warning.
See my other replies on this page for some reasons why I think there are no pages where HTTPS is not important.
I agree with you regarding the UI issues and the potential to generate apathy by crying wolf. That's why I think that the specifics of the linked-to proposal won't work. But, I think the general idea is worth investigating. It just requires some user research.
Also, the fact that browsers support a non-HTTPS mode at all is really the bigger UI issue. Imagine if HTTPS was the only option. The biggest UI security problems would instantly vanish! That's a big reason why a lot of people are actively working so hard on finding ways to make HTTPS work for everybody on every site.