"""How are either of those requirements wrong? I certainly expect my programs to be bug free."""
Good luck with that. What I said, though, was that "a problem has to be bug free to be useful" is a wrong assumption. We all use programs that have bugs, and still found them immensely useful.
"""Yes, in theory, you could rewrite TeX to be cleaner, while maintaining backwards compatibility and lack of bugs and regressions. In practice, this is very very hard. It's so hard that no one, no individual or company has managed to pull it off."""
What are you talking about? Tons of people have written TeX versions of their own, even in Lua, and most of those are widely used.
"""But hey, who knows? You could be the first."""
Hardly. There is LuaTex, XeTeX (even more widely used) and others. Are you just talking out of your ass? (Not to mention several other modern typesetting engines that are not TeX based. You make it sound like TeX is an impossible achievement).
Now, what I said I'd like to see was not a rewriting of TeX itself, but a modern version of a TeX like engine, with or without compatibility. Programs like XeTeX and Omega for example provide Unicode support and TTF/OT support to TeX, but I'd like to see something more modular, and with a more streamlined markup than TeX+LaTeX. While we're at it, even scriptable.
There are also some improvements found since in typesetting, like those employed in the InDesign layout engine concerning edge text and hyphenation.