The way it's implemented in OSRS is really the only way to properly balance it. If you don't know, it can only be used in the wilderness, and you can only take items out in the bank. It effectively gives you more space to bring loot home from dangerous areas, increasing your staytime, how much loot pkers will get from you and how much you can profit. It promotes high risk/high reward gameplay.
The way you seem to have suggested it would quite simply make PvM/gathering skills/pretty much anything else where your inventory limitations are a factor a lot easier. This is something we definitely do not need. PvM is already dead easy, making anything easier will have an effect on the prices of the items you get from it. I wouldn't want everything to crash further.
Degradation would make it a little more okay, but a few mil is a small price to pay for an extra 14-28 inventory slots. That money can easily be acquired through using it. That amount of inventory slots will make you bank 1,5-2x less than you would normally. Saves you a ton of time in the long run.
I am a fan of how it works on OSRS, however it would require a custom interface and a lot of coding, so I don't think it will be worth developing.