Bitcoin protocol / algorithm scalability
1) It's not clear why you think every client having to download the entire block chain is a scalability problem. Pruning currently doesn't take place but it should eventually be possible in theory. Storage space is growing at a much faster rate than Bitcoin is.

2) To validate a new transaction, the only transactions you have to look at are the inputs to make sure it validly claims them. Presumably, you already know every currently-valid transaction output already. You have to check a block in order to accept it anyway.

3) This is the nature of the way Bitcoin prevents double-spending attacks. It's because Bitcoin has adopted a "no central authority at all" approach. Nobody, as far as I know, knows a way to do instantaneous transactions without a central authority. (Consider, for example, if a natural disaster splits the Bitcoin network into two halves and each half sees a conflicting transaction. How would you know?)