"that's 3,280 feet! The max encounter range in the DMG is 640 feet for open grassland? I know for a fact that I have a good chance to recognize someone I know at 1500 feet over water, but in game I would have no chance of knowing where they were, let alone who."
And that's precisely my point. Let's take the rules at thier word.
Imagine I'm standing under 10 feet away and not hiding when you walk into the room. What is the chance that you see me? Under the rules, not hiding is the same as taking '0' in hide and since I was not trying to hide (or have no cover to hide behind), lets assume for now that I don't apply a skill modifier. Further, since medium sized creatures have no modifier to 'hide' rolls, the modifier is +0. If you roll better than a 0, then you spot me. Since you can take 10 unless you are rushed, even a person with 3 wisdom should spot me every time. So unless there are situational modifiers (its dark, you are distracted, or rushed), the rules generate the realistic result of me pretty much always getting 'spotted' and we don't have to worry about rolling.
At 100', there is a 50% chance I'll go unnoticed, which may not be accurate but is at least believable.
All is well until we run the same test at 300 feet (or more). Now suddenly the DC by the rules is +30. Since the initial DC is 0, +30 yields 30 DC. Only a person with near epic levels of spot will notice me without resorting to 'rule 0' and assuming I should be spotable.
By the time we get out to real world reasonable limitations on vision, say two miles, the DC goes up by +1000 under the strict rules and the attacker is now better than invisible. One can easily imagine situations in which a character with 20 better in his spot skill than his target gets back 200' further than his targets 'limit of game vision' and unloads with spells with long range or a longbow and under the rules at least is undectable without magical aid.
Under my suggestion, the spot DC modifier at 3280 feet falls from +328, to +21. Even that is probably too high, but it is a step in the right direction and doesn't require that much more complex of math.