Why did you pick 20" in your example? That's probably on the small end of mirror sizes for this application.
The Hubble Space telescope's mirror is [link|http://www.coseti.org/9008-065.htm|2.4 m in diameter]. It was probably exceeded in resolution by several [link|http://users.ox.ac.uk/~daveh/Space/Military/milspace_recon.html|military satellites]. That page claims resolutions as small as less than 10 cm.
[link|http://www.digitalglobe.com/products/standard.shtml|Digital Globe] is claiming that they have 60 cm/2 foot resolution from their [link|http://spaceflightnow.com/delta/d288/011015quickbird.html|Quickbird] satellite. It claims to be the highest resolution commercial imagery satellite available.
Your points about atmospheric turbulence, etc., are well taken, though there are [link|http://z.iwethey.org/forums/render/content/show?contentid=80136|ways] to get around some of them. ;-)
Being able to count toe hairs from 150 miles up probably isn't feasible anytime soon though, as you rightly point out. :-)
Cheers,
Scott.