To come back of my promise of last Friday, here's is my suggestion on how
poker tournaments could work.

Tournament creation
First step is to create the tournament. The organizer sets a start date
and time, and defines a few parameters (limit/pot limit/no limit; stakes
seconds/move, max/min number of players). (S)he also has to define the
number of chips a player starts with - the "buy in". I can imagine two
variants: 1) players bring in their own chips (as is done now for the
existing poker tables) and 2) tournament chips are not related to the total
number of chips a player owns - you get a number of chips to play with, and
they're gone afterwards. There should be some checks so that the combination
of parameters are sane (stakes 5/10 with 10000 starting chips or stakes
500/1000 with 750 starting chips are not desirable parameter combinations)

Tournament signup
There will be no advance signup. The table(s) ought to open for players
a few (10?) minutes before the sceduled start of the tournament. Players
should be seated before the tournament starts - or else they cannot
participate.

Sitting out
You cannot leave the table - once you're in, you have to continue playing.

Winning condition
The winning condition is simple: last person to have a positive number of
chips wins the tournament.

Blinds
Blinds should be automatic, and there's no sitting out.

Stake increase
Over time, when players get eliminated, the average number of chips/player
will go up. Stakes (including blinds) should increase during the course of the
tournament. To pull some numbers out of thin air: a 10% increase each time
a player gets eliminated from the table, or if the button (dealer) has passed
around the table twice, which ever comes first.

Timeouts
Eliminating a player if (s)he timeouts is perhaps a bit harsh. However,
keeping her/him in and having him/her timeout over and over again is
very annoying of the other players. So I suggest the following. Once
a player time outs, (s)he goes into "time out mode". A player in time
out mode always puts in her/his blind (if (s)he is a blind); otherwise,
as soon as it is her/his turn, (s)he folds. That way (s)he doesn't hold
up the game, nor can (s)he win. Also, if a player times out, a button
appears on his/her screen. Pushing the button brings her/hime out of timeout
mode, and back into the game.

More tables
If a tournament has 10 players or less, the tournament can be played
on a single table. Otherwise, the tournament has to start on more than
one table. As soon as 5 (or, in rare cases less) players are left at a
table, they advance to the next round (keeping their current number of
chips). Repeat until there's one table, with one winner left. Of course,
another cut-off number could be picked as well (perhaps only the top
3 should advance).