Dinner is cooking, so I've got some time now, just as promised.
First, this:
Their results certainly at World Cups recently seem to be better than ours of late, so somethings working.!
Just no. The better results is mainly due to to the facts that all stars were aligned for the US against Ghana, otherwise they would've gone out of the tournament. Next thing is that a huge pack of their players was developed by foreign federations, mainly rejects from the german NT.
About this non-EU restriction: Would it help? No. As a stand-alone measure it would only lead to more EU-players filling up the league. Restricting these would lead to a situation similar to Turkey: All half-decent homegrown players would be ridicoulusly overpriced. Just not an option.
Onto the next topic: The apparent love for the german youth-reform. Yes, a lot of things have been done right. No doubt. The overall quality of youth players rised. But why did it even drop? Part of it was laziness, part of it was the rise of TV-Revenue that Leo Kirch gave us. There were times at the end of the 90's and star of the 2000's when some times in the Bundesliga did not field even one german player. Sounds familiar, huh? And it was done by the smaller clubs, the one which youth education relies the most.
Problem is, it's always cheaper and safer in the short team to rely on foreign educated players. And all clubs in the Bundesliga did it, so you had to do it in order to stay up. Sounds familiar, too. Just the same as in England to.
Do I believe all this youth explosion would've happened if things remained the same? No. The clubs would've still rely in foreign players. What happened that Kirch went bankrupt, revenues dropped and clubs suddenly started to rely on their youth, which had become better over the years. And it worked! This lead to a change of mindset, so that today, even if clubs would be able to affort foreign players, they realised it's cheaper and better to rely on their own youth. This, though, is supported by the fact that while we managed to up revenues again certain clubs and especially the premier league went far ahead and it's not possible anymore even for the more wealthier clubs to afford the absolut top-talent. To gain these top talents, they have to develop them by themselves.
It's quite the same in Spain, where most clubs besides Real and Barca became quite poor, especially in recent times. So they started to rely on youth again.
Playtime is the most important thing in the development of a player, nearly regardless of his talent as long as its enough for the first division. Guys like Kramer would've never came up in England.
Nothing of this will happen in England anytime soon, though. So even if you would increase your efforts on youth development, I don't think anything would change because in most cases the clubs relying on youth would just get relegated.
Next problem for you is that there's so much money even in the lower leagues. If you look where a lot of german talents origante from, it's often the second (Benders, for example) or even third (Marco Reus!) league.
As long as the premier league stays as strong as it is and no effective measures towards forcing clubs to play english players are taken, you are doomed. Changing youth development patterns won't change either. It's a question of what you wan't more, the amazingly wealthy premier league or a good NT.