Let me see if I've got this straight (I've never gotten an explanation of Tesla from an actual Tesla fan, so I have some catching up to do):

1. Single-wire power transmission is enabled by simply putting the load between the source and a reactance (capacitance or inductance; his sketch labels this "capacitance"). I believe this. There are some interesting practical implementation questions (does each device have its own reactance? Each house? Each neighborhood?), but it squares with what I know of electricity.
2. Because the Earth is a good conductor, we can simply replace the wire with the Earth. On some level, I believe this; it's why grounding rods work.
3. What do you do about the Earth's *reactance?* You can't do single-wire transmission without Alternating Current, but with AC, you get losses due to capacitance and inductance. If the Earth is reactive, it would be like you put a second capacity reservoir between the alternator and the light bulb in Tesla's diagram. My guess is the reactance is absolutely huge, but maybe I'm wrong. How do you get around that? Maybe it's not an issue if the Earth's reactance is low enough.

I left our last conversation hanging; you had sent me a link to a paper by a friend of yours talking about some problems with Maxwell. I looked at the paper, and I would love to digest it and understand it, but I'm not very well versed in EM theory so it would take more time than I have to spare at the moment.