At higher ISO settings, Canon sensors are as good as the best of them. So, if Canon were to offer an optional ISOless interface, increase the bit depth of the capture files to 20 bits, and have the cameras shoot permanently at ISO 3200 in the ISOless shooting mode, they'd match or beat Sony's sensors in terms of noise and DR.
By making the ISOless UI optional, it would still allow those who find the current noise and DR levels to be "good enough" and prefer setting the ISO themselves to continue as before without any bother.
At low ISO the DR is limited mostly by the sensor read noise. At high ISO the DR is limited by the well capacity and therefore the photon noise. In other words, at high ISO the DR limitation is in the light itself even before it hits the sensor. Therefore increasing the number of bits in the electronics would not increase the DR at high ISO.
Increasing the number of bits will increase the DR since the read noise is lower (much lower) at higher ISOs on Canon sensors (up to ISO 3200, or thereabouts, after which the sensor has flat read noise). That's the point of my OP.
I see now what you meant, but did not say thus making your proposal unclear. You apparently assume that the read noise would remain at the same count number while the numbers are lower with more bits and therefore the read noise would reduce relatively to the signal. Did I get it right?
I believe this is a wrong assumption. If you simply increase the resolution of the ADC by 2 and leave everything else the same, the ADC would simply measure 1 photon as 2 and 1 electron as 2 and therefore the SNR would stay the same. But this is not what you want. You want to increase the number of bits while keeping the ADC count 1 to 1 with photons and electrons. This effectively means increasing the well capacity that would indeed increase the DR. Therefore you are saying that the well capacity is limited only by the ADC resolution. Is this a fact? I am not a sensor engineer, but I do specialize in solid state physics and I suspect that the sensor saturation level is an actual physical limit on the number of electrons the CMOS can produce that happens before ADC and has nothing to do with it. The ADC may indeed be tuned to have the highest bit just below the physical saturation level of the sensor, but it does not mean at all that adding an extra bit at the top of the ADC would allow the CMOS producing more electrons than it can.
If your assumption were correct, it would indeed be an easy fix. High resolution 24-bit codecs (ADCs and DACs) have been used in the audio industry for at least a decade and by now cost little, if any, more than 16-bit ones to produce.