We have a habit of taking an extreme case and acting like it is the norm, and passing laws accordingly. Sometimes things fail, things go wrong, etc. and unfortunately people die without it being an inherent flaw in the whole system. Yet we feel the need to over regulate as a result.
All that does is make us dumber in the end. Sure there is something to be said for being safe, but mandating safety doesn't work. You just make a better idiot.
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Lets talk a little more about lateral bracing. I don't think that this would have to make a building more expensive. I don't really even think it is a guarantee that German framing would be inherently more expensive than American, some forms of it I think have the potential to be more affordable. But this is another discussion altogether.
The long braces aren't lateral bracing, but they do contribute. The primary lateral bracing is the horizontal members between the posts, that tie the posts together into a rigid system. This adaptation could very easily be added to a timber frame without making it much more expensive.
Let's look at Pol barns, a related construction method. Pol builders today are aware of the need for lateral bracing to make their frames rigid. This is accomplished by nailing horizontal 2x4's to the outside of the frame every 2 feet, which conveniently also serve the function of supporting the metal siding. Most builders probably think that siding is the only reason for these, but it's not.
Don has a good point as well, we need to make our frames and our walls compatible with each other. We shouldn't use these that don't work together by virtue of their conflicting natures.
Also we need to be (and I think we usually are) well aware of modern concerns that did not apply to builders of the past.
The solution to this is, either only enclose the frame in ways that are compatible with the way we make our frames, or else adjust the way we make our frames to meet modern concerns. We may have to make the frames in different ways for different situations.
The problem with the typical American frame as I see it is this: Load transfers and bracing occur over only a very small area of any timber, the rest is free to flex and bend all it wants. The flexibility problem does not lie in wooden joinery, but rather in the fact that the posts have no reason not to flex. The major flexing does not occur right at the joint, but gradually along the length of the timbers. By enclosing the frame in a rigid system we make it impossible for the timbers to flex. alternately, if we braced the posts against each other they would be unable to flex, allowing us to enclose the frame in a less rigid shell.
Now here is a thought, what if you flipped your larsen truss-like system to run horizontally, suddenly it would provide bracing to the frame.
