This is a cool idea and very much reminds me of a post I did last year:
Basically, after discussing, we eventually got to the conclusion that by using only stealth addresses without SNARKS, we reduce complexity by only requiring 40 year old basic EC cryptography to achive a “quite sufficient” level of privacy.
Also Railgun has a very similar concept, I think. What do you think are the differences here?
Regarding your question at the end - yeah that’s possible and at the same time an important trade-off to think about. The deeper the merkle tree, the more space for interaction and the more expensive for users.
Imo, Tornado Cash resolved that quite well with a merkle tree depth of 20.
Also check out EIP-5564 for more infos on Stealth Addresses