Late developers would lose the safety net of a big club that can afford to pay their wages and wait if their first loan or two doesn't work out. I dare say one Harry Kane may have been lost by that approach.
Giving an example of one player doesn't prove the point. You could equally say that Dele Alli wouldn't have developed like he has if he hadn't been playing competitive senior football in his teens.
There's a huge gap between U18 and U23. I can see your point, but almost nobody is going to be the finished product at 18.
First of all, it would be less of a gap without all the best 17 and 18 year olds playing U23 football.
I don't expect any player to be 'the finished product' at 18, far from it. Apart from really unusual cases like Owen or Rooney, I can hardly think of any players who haven't improved markedly between the age of 18 and 23. Even those two were probably a lot more consistent by the time they were in their 20s.
But in terms of making that step from 'promising youngster' to 'finished product', are they really best served with football in the U23 league? How many games of U23 football did Sterling, Gomez or Trent play? How much did they progress whilst playing at that level? Seems to me like the best youngsters are already getting a taste of first team action by the time they're in their late teens anyway, and that's going to accelerate their learning way beyond what they'd be doing playing U23 football.
For those who aren't going to make it at Liverpool, wouldn't they be better off cracking on with their careers? Conor Coady's a good example. Not good enough for Liverpool, but a fantastic player carving out a brilliant career by working his way up through the leagues. Adam Lallana is another one. Ok he can't stay fit for us over the last couple of seasons, but he was playing League 1 football in his 20s and ended up playing European finals and major international tournaments.