It'd be nice (but ultimately unrealistic in our culture I feel) if we could implement an honour system. Vancouver and Toronto, Canada do a great job of this. Everywhere has ticket issuing facilities (TVMs if not staff), and the money from this can come from not having barriers.
Yep, you can just walk onto the trains. However, if you are inspected and don't have a valid ticket, expect a nice fine ($150 on Vancouver regional rail). Conductors need only walk through and actually inspect, rather than spending 10 minutes selling a ticket to one customer.
Well, don't forget that the UK already has honour/proof-of-payment arrangements on self-contained systems such as the Manchester Metrolink, Croydon Tramlink, Tyne & Wear Metro and the DLR. The Metrolink in Manchester is operating with up to £100 fines for evasion, with TfL operating a £50/£25 scheme.
A lot of people on RailUK are opposed to Penalty Fares in a National Rail setting. I personally think there is a need for them on busy city commuter routes with short-distances between stations, providing that there is a ticket office at almost every station or at the very least, 2 TVMs with a Permit-To-Travel machine.
I personally like what SNCB in Belgium do with fares - if you inform a member of the train crew
prior to boarding that you don't have a ticket, they will sell you one subject to a relatively small supplement, but without any railcard discounts e.t.c. If you don't do that, you'll pay the fare plus a penalty supplement of 12.50 euros, which increases if not paid either immediately or within 14 days.