I now I've come across this in the discourse on type class constraints, but I can't for the life of me remember what to search for to brush up. You'll have to elaborate to explain why this is such a problem.
Yup, seen that one before. I believe he just goes though why it's hard to build an efficient set implementation, but doesn't elaborate on alternatives. Like using module functors or parametrising the type by the dictionary. Will have to watch again.
The set thing is just the motivating example (it's to do with a union operation IIRC). The main point is that it's not possible to do that without coherent type classes! The conclusion is that everything else is inferior :)