Much as I’d love to see the Republic of Westeros with Davos Seaworth for President/Prime Minister (and maybe Sansa as purely ceremonial monarch – she’d be great at the ribbon-cutting stuff) I doubt that will happen. What do you think could be done, realistically, to improve the lot of the smallfolk? The economic development programs are a great start — but what rights/privileges could be added in a medieval setting?

There’s a lot, actually, depending on what the actual legal status of the smallfolk is. For example, we have no idea what the rights and privileges Aegon V tried to give the smallfolk were. 

To me, the major areas where things could use improvement are:

1. royal justice system. Local lords having the right of pit and gallows over their smallfolk is a system ripe for corruption and oppression, which is why historically one of the ways that monarchs gained power against their nobles was to ally with the commoners by creating royal courts, appointing royal judges and sheriffs, etc. so that the commons could have their cases heard by the king. Abolishing the right of pit and gallows, appointing royal judges in the various kingdoms, establishing the right to appeal to these courts and maybe even the right to trial by jury – these things could make a huge difference. 
2. self-government. Part of the reason I won’t shut up about city charters is that they were a major source of rights and liberties for the common people, and once the commoners got city governments up and running, they historically formed the basis for resistance to noble and royal authority.
3. poor relief. One of the things that was omnipresent in medieval Europe but doesn’t seem to be present in Westeros is a system of poor relief. Historically, the Catholic Church provided a crude but surprisingly comprehensive system of supports for the poor – hospitals for the sick and disabled, hospices for the dying, leper houses, orphanages, alms for the poor and almshouses for the homeless, etc.  Especially in an environment with very severe swings in weather and climate, you’d think that the Faith of the Seven would have some sort of system to help people survive the winters. 
4. common land and customary rights. Another aspect of medieval society that doesn’t seem to be present are common lands and customary rights for the smallfolk. Historically, villages and manors had some area of land that was not divided into individual plots but rather held in common by the people, who were allowed to make use of the land. This land was vital for the poorer peasants, especially those who had little or no land of their own – they used the commons to grow vegetable patches, graze some livestock (chickens, pigs, sheep, etc.), and in general help make ends meet. At the same time, communities also had customary rights to various forms of land use – the right to gather fallen wood or cut down a certain number of trees in various forests, the right to hunt various kinds of animals, water rights wrt to local rivers and streams and the like, and so on.