Well, glad I could contribute and I hope that we all find an easy and elegant set of rules that are balanced and make sense. What about this for size.
Keep the move and shoot penalty at (-1) 0/0 for any movement. Take away the long range penalty all together and make extreme range a (-1) 0/0 only. This way only the big boys that have greater than 14" range suffer a range penalty, but it's not a horrible one. 3 dice would make sense, but 2 seems a bit low. With this I would want to keep the no penalty for shooting into an engagement. How's that for kiss?
I like how you're thinking, in terms of KISS, but let's also keep in mind what is the desired goal. Per my understanding, the goal is to provide a cookie to make combined arms shooting good. Which, per my understanding, equates making a (4)5/5, Rge 14" Indirect Fire unit (henceforward referred to as an "average archer unit") a good buy. However, there is also the additional caveat of not boosting shooting in such a way that stand-and-shoot becomes too good. I'm in agreement with Kevin in what stand-and-shoot does to the game, and therefore if we make stand-and-shoot as good as other builds then it triggers the negatives that Kevin mentioned.
So to summarize, to me, the desired goals are that any package of rules changes should have the net effect of:
1) Make combined arms shooting by average archer units a good build while not making stand-and-shoot builds any better than they currently are.
2) Being simple
3) Being intuitive
Obviously, it's probably impossible to hit the brass ring on all three of these and so any proposal will end up ranking these three design goals so that when they conflict, we know which trumps which. My order of ranking is as I listed them, with the understanding that in choosing one solution the others may be strained but not violated (for example, while I'm sure there is some solution involving calculus that would achieve the desired #1 goal but it would violate goal #2 like a mo-fo). Kevin's concerns about archery affecting dice seems to violate #3 for him, and I think its very good he raises the point. I'm less concerned as I think that there are realistic justification/explanations, but I think its good to have these justifications explored.
Anyway, onto Gornhorror's specific idea, I have deep concerns that it violates goal #1. Removing any long range penalty while keeping the move & shoot penalty benefits stand-and-shoot builds quite a bit. Sure it is very simple, but I strongly feel it'd have a negative impact on the game.
I can appreciate his concern of archers going down to 2 dice seems really rough, but it is better than if an archer unit suffers (-0)-2/-0 for long range & moving (which is how someone would get to 2 dice under my suggestion). If an archer unit moved & is at long range vs a D: 2/2 unit, then with the current penalties it will need 1s to hit and 3s to wound, for a total of .33pts of damage (assuming 4 dice). If the penalty is dice, then the archer unit will do .5 pts of damage (3s to hit and 3s to wound with 2 dice).
Speaking with the autority of someone who did archery at summer camp for a few years back in the day, far away targets are harder to hit; large targets are easier to hit. (This revelation is doubtlessly a shock to many.

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Any system of modifiers which doesn't reflect that doesn't pass the smell test, IMHO.
I agree that it doesn't seem intuitive, but then again, neither does the penalty for shooting at cavalry. Chad said as much when it was introduced, and I think there is a place for saying that sometimes you do things in a game system for the good of the system that may not be the obvious, intuitive choice.
I think elgin raises a very good point that a single person aiming at a target is different than units firing in volley. I view improved skill as training and practice at volley fire, but there is also a limit for skill. If the absolute maximum range of a weapon is X yards, then even an Elven lifetime of training isn't going to let you hit a target at X+20 yards.
Hannibal, any chance of playtesting this and coming back to us with your results?
I probably could, but I have to ask half tongue in cheek, why me?

I'm not on the rules team. The playtesting I've done heretofore has been solely for house rules, and I certainly don't want to stoke resentment by being seen as circumventing the process of peer review.