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The Western Extension was misconceived in several ways--as you say, it shouldn't have been the same zone, it should have been announced clearly that it would be the first segment of a(n eventual) ring around the Central Zone (although there were no such plans that I'm aware of, partly because of what is in the next paragraph), and it should have been less expensive than the Central Zone, which should have been made more expensive than it was at the time.
Having said all that, the technology used at the time was already effectively superseded (as it is now, even though it's still in use), and the political uncertainty over any primary legislation enabling the use of more modern technology has made further progress impossible. I still think Livingstone shouldn't have gone ahead with it, as it was too badly compromised, and he should have taken a fresh look and done it properly.
I agree with you that the Congestion Zone should have stayed extended,
but,
I have one mate who lives in Kensington.
He told me that his car-driving neighbours were looking forward to the extension,
as with the 'promotion' to 'residents' of the CZone, most of them were looking forward to no longer paying the charge during the week, as they mostly only drove short distances, (kids to school etc). The Congestion Zone should be re-extended, but split into two zones, with residents paying to drive into the other zone.