Again, no offense intended. It's not easy to find the "right" balance for something like this.
TWO-DIMENSIONAL SPLINTERING CONVERSATIONS
The two-dimensional approach invites off-topic responses. It makes a single topic easily splintered into many topics and personal conversations much like multiple conversations in a room full of people would. This is both a strength and a weakness. I suggest that if the site is going to provide two-dimensional topics and splintering, it should do so with gusto and do it without limitation. Creating this structure and then adding a brick wall with the "max message level" is a mistake. One idea would be to put the 2-dimensional tree in a fixed-width 2-way scrolling IFRAME so you can keep the ads visible on the right.
The way digg.com handles comments is interesting. The community promotes the "good" ones and censors the "bad" ones with a single click. When a comment gets enough bad clicks, the site will hide it (can be re-displayed). Of course, this gives editorial control of the site to the visitors. But, since the visitors are providing the content, it is natural for this to be the case.
It takes a lot of work to get a site like this to work really well.
ONE-DIMENSIONAL CONVERSATIONS
If the comments to an initial post were one-dimensional, it would tend to keep them on the original topic, responding more to the original poster and original topic. Of course, this is a radical change that will destroy the way the site currently works. It will greatly reduce site traffic and value to advertisers.
All the best to you...