I hate to mention other sites, but it seems they can have hundreds of responses that post in a thread according to time entered. It would seem easier to read.
Is there a way to give a third option to viewing threads? The "tree" setting allows you to people's responses to specific posts within the thread, but only show the subject, which then requires having to click on each one to read. The "flat" option allows you to read all the responses, but in chronological order, which makes it hard to decipher if the 8th post is a direct response to a previous post or a general response to the OP. IMDB gives both options, but also offers a third, nesting, which opens them all up, like the flat option, but orders them similar to the tree option. This would allow for much easier and faster reading of threads.
There are several boards I frequent that use that very method, and it does have a lot to say for it.
However, TER has so many users, and so many responses to most threads, that you'll end up wearing out your scroll wheel going through all the responses, so I think the tree method is the best compromise for the site.
Oh wait! You don't know about flat because you are on "classic" 
I hate flat, because the threads get all messed up and you have no clue who is responding to who on long threads. I always use "tree," but the folks who use "flat" even mess up the "tree" format because their replies end up in the wrong place on the tree. I think the OP's suggestion is a good compromise, as it will allow folks to read without clicking on every post (as flat does now) but at the same time, keep the thread in order (as "tree" does). And I can't imagine it will make the long threads take up any more space on the page than the "flat" method.
I use classic when I'm on the RO board because the link to that board works better when I'm using my Kindle
to a specific post within a given thread; so all post are opened and you don't have to keep opening and closing posts. It can take up a lot of space, and occasionally a set of responses will end up going onto two or more pages, but that is rare.
I know of two sites that are like that. One can not be mentioned here because they compete with TER, but the other has no reviews, just discussion boards and you can check them out to see what I mean. It is called Courtesan Culture. Just do a search for it.
where every post is open. Am I missing something?
Besides the OP is asking for his so called "nesting" mode as another viewing "option", not to replace the "tree" mode. If he was talking about getting rid of "tree" mode, I would be in strong opposition, since I like the tree mode.
but no one that I know uses that since it doesn't let you know who is responding to whom, and is therefore a bit lame.
IMDB has millions of users, and threads can go several hundred posts long, yet the format I mentioned is an option there. Just looked, and a thread of 140 responses was laid out on 3 pages.
Wasn't the real problem with that was because it brought a thread back to the top every time someone posted a new response?
I hate to mention other sites, but it seems they can have hundreds of responses that post in a thread according to time entered. It would seem easier to read.