Balancing lost keys with new coin over time might work pretty well. But that's not the choice that was made when Bitcoin was finalized. It will take until around 2040 before the transaction fees regularly exceed the block rewards, and we'll still have a hundred years for the miners to get 100% of their earnings from the fees. I think looking long term there won't be any danger to stability.

Don't get me wrong, I'm not dumping on Monero or the people using it. I'm just choosing not to.