What flaws do you see in the following design, (and what would be your ideal architecture suggestion) for a typical web 3-tier application?
My current blueprint appr
Overall, it seems like a very good architecture. If you haven't already read it, I would recommend Martin Fowlers Patterns of Enterprise Application Architecture, which describe every subject in your question.
It is not clear from the question how large an issue you expect performance to be. In my experience, the performance bottlenecks are rarely where you think they are, and the sooner you find them, the easier it is to change the architecture to match.
You are right that testability is a major concern. I have used Martin Fowlers Passive View-pattern with some success. You should also take a look at Supervising Controller, from the same site.