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Bertvan writes: "Applying this to evolutionary theory, biological innovations would originate in individual living systems, not their genomes. The genome would be the record of past adaptations; not the origin of new ones. Used organs develop and unused ones atrophy"

I'm sorry Bertvan, no offense, but this idea is totally contrary to emperically known biology. Biological innovations do not appear de novo. Every protein is constructed by a precise sequence of assembly and gene expression. And an innovation (or an organ, to use your example) is made of many thousands and sometimes millions of individual proteins manufactured in for a specific and timely purpose within the organism. The levels of complexity are utterly alien if we put it in terms of technology.

Your proposal is a strict reversal of known nature. It's an innovative concept, but check the following YouTube link for details. It will take you to part 5 of 7 of a terrific documentary. I reccommend also watching part 6 as well for this subject (the whole thing really). Each is approximately 10 minutes.

http://www.youtube.com/watch?v=6Je1GdGpsxI