Reforming the legislative branch: Fractal government

So every now and then I like to think about how we can do things better than we're doing them now. One idea I've been thinking about lately is that of modeling part of our system of government off of fractals. Fractals are patterns which look similar at any scale, thus a very small scale government (perhaps one city block) should have a similar layout to congress.

Before explaining the idea, I think that I should explain why it's required. Simply put, the legislative branch in the US Constitution was poorly designed. It worked well at the time, but it scales poorly with population growth. If we kept to the ideas of the Constitution there would be 30,000 members of the House today. If you accept that there's an upper limit on the size of a body that can be efficiently managed (and there is, Dunbar's number suggests that for a congress it's about 500 people), then you accept that Congress has a hard limit on how much it can grow. This in turn means that once it reaches it's maximum size, which has already happened, that Congress must in turn represent ever larger districts until the point that a single district, represented by just one person is now larger than the entire country was when it was being represented by 100 people. Montana for example is being represented by 1 person today. In 1800 they would have had 20.

My idea here, would be to model government off a grid of squares. Each level up the grid is simply a new grid made up of chosen people from the old grid. So in laymans terms we create the basic building block of government out of a small odd square: 9, 25, 41, or 81. I like 9 the most. Not only is it a good worker/manager ratio, but it's a realistic number with your adjacent neighbors (but larger squares allow for fewer layers of government). Importantly, the exact number doesn't matter at this scale, only that it's there. This block would vote one person as their representative. That representative takes issues up to the next level.

The next level could be a neighborhood level. Where the 9 appointed members meet and organize a plan. One of these 9 becomes elected from within, to send someone to the next level.

Next we get say a city district of 9 members. These 9 members directly represent 81 people, and indirectly 729 people. From their 9 they elect 1 who goes to the city council

And so on up the chain.

From the city level we get to the county level, and from the county level to the state level, then from the state level to the federal level.

I'm a bit tired right now so I hope I explained this concept properly. So some things it could do that our current system cannot:
Each level of government could be assigned specific issues under it's local domain.
Taxes would be an issue of domain, local issues handled with local taxes. The feds or states wouldn't be involved in buying policy.
Each politician would be known, at the lowest level it's your neighbor. This reduces animosity
Corruption would be hard to manage due to the layering.
With few votes at each level, campaigns would lose all need for outside money.
Digital vote tracking software could make votes painless, free, and secure for each district. No more ballot boxes. No more cheating.
This gives us a system of delegates that aren't too large, and are each responsible to a few specific people. True representative democracy

This would apply up to how we choose anyone in the legislative branch. Executive voting would proceed as normal.

Thoughts?