I have just installed 14 panels (about 2.5 kWh) grid-connected as part of a larger green renovation and it has been a booming success – our last electricity bill had a $148 credit. The reason is two-fold: one, we're now using nearly half the electricity we were using prior to the reno – for example, we haven't turned the aircon on so far this summer because we've found that the additional insulation is very effective at keeping the heat out, our ceiling fans are incredibly effective and the new cross-ventilation helps keep things comfortable, and because of the shaded, double-glazed north facing windows we don't use internal lights much either (and they're all CFL anyway). The other reason is that we get a net feed-in tariff (unlike Germany where there is a gross feed-in tariff) of 60 cents per kWh from our retailer. As it's high summer here now we get 8+ hours of daylight.
"A while back I priced a 5kW system at $50,000"
I'd be surprised if the system cost that now, especially because the cost of solar panels has nearly halved over the last year or so because of the Chinese factories coming on line – with RECs a 5kWh system here would be about $15,000.
Edit: I checked – about $30,000 before rebates and RECS.
"last year my consumption averaged 33.4 kWH per day (remember we need air conditioning for several months a year)"
33.4 kWh ?!!! That's nearly double what my family used in mid-summer, during school holidays, with the air-con on, when they were all at home – and you may be aware that Melbourne's a pretty warm place.
"The only way you can realize a ROI (amortize your costs over 20 years – which is what most quality companies warranty their panels for) is to take advantage of the federal and state tax credits. This means that other tax payers would have to pay for part of my installation."
Have to disagree with all that. Ultimately the reason why governments are willing to subsidise solar (or wind) is that it's no more expensive than building new power stations. So taxes can pay for new fossil fuel stations, new nuclear plants (which are REALLY expensive) or renewables. If private businesses build the power stations they will require a commercial rate of return. Distributed generation is a legitimate engineering concept.
By the way, your electricity rates look very, very cheap: both here, the UK and Japan are definitely more. I suspect that like petrol prices in the US, your energy costs are not being appropriately priced.
"However, I think in the next 5 years we are going to see improved technology and lower prices"
As I said above, when we got our quotes from our supplier the Chinese panels cost nearly half the "Australian" ones – $727 vs $1,290 (and the "Australian" ones were manufactured in China anyway). So we left the budgeted amount, added a bigger inverter and upped the number of panels. We may add a battery system as the next step.
"… Also the residential solar market is just taking off and prices will get more competitive."
As you noted re Europe, demand doesn't bring down prices – it's supply that does.