The current approach is definitely less than ideal. It took me about 30 hours of playing to figure out how to cast spells using a higher slot! I knew from the rules that you could do it, but I thought they just hadn't implemented it yet.
So I wouldn't use hot bar clutter as the justification -- I think it would just make it far more obvious. Especially to non-D&D players who pick up the game because they heard it was good, but haven't ever played 5e before.
That said... the pop-up window could make spell casting very cumbersome so if they did this, it'd be nice if they made it "smart".
Things like:
- do not show if there are no spell slots of a higher level available (either because you've used them up or the spell uses your highest level spell slot already)
- do not show if it makes no difference to the spell (e.g. Mage Armor, which is always AC +3 for 8 hours even if you use a 9th level slot)
The other thing to consider is how would they do spells where there is both a choice and a level adjustment? For example, if they implement Chromatic Orb, you get to choose the damage type (acid, cold, fire, lightning, poison or thunder) and then you can also cast it with a higher spell slot for extra damage. Would we see two dialogs, one after the other, or one dialog that has potentially 6/12/18/24/etc. icons in it?
Not an insurmountable problem, but something to consider.
But yeah... if not for the clutter, they need to do something to help noobs figure out that the feature exists and how it works. Right now, it is not that obvious.
