I would try validating his ideas but then suggesting that he try starting small and growing as needed rather than pre-structuring and pre-creating the entire layout he desires. Say that those sub-spaces should be created when demand demonstrates that they need to be created. This way, as a Leader, he can focus his attention on building activity in fewer spots - it makes his job easier to start with as well.
Thanks, we got to the root of the issue, preserving the division identities. Once the cumbersome navigation structure was displayed and there was some more education about other features in the SW (pages, tags, customization, etc.) we were able to agree that the identities of the divisions could be preserved without using subspaces.
If you run into that kind of person again (and I know you will), I blogged about it, based on our work with your organization, as well as many others like yours. In particular, check out the risks associated with the prescribed approach, further down the page, which is what you are describing.