[midas007]

Yes, it's a known weakness. You have to rekey every X blocks.

[tptacek]

No, rekeying does not solve that problem, not to mention which you've just handwaved a hard problem (varying the key over different sectors). That's doable (though it again doesn't fix the problem with your proposal), but the resulting mode isn't CTR.

[midas007]

Yes it does, and it's still CTR.

Further, every solution is going to have other machinery solving specific concerns.

You don't call XTS something else because you've used scrypt or PBKDF2 as the PBKDF.

Work is work.