Dear Israel:
"The general theory of relativity offers one way to solve the puzzle by postulating expansion of space though it does not seem to be very probable. The fact that expansion does not solve Olber's paradox at all makes me lean towards the other model."
!!!!!!!
First of all, GRT is NOT---*absolutely NOT*---needed a priori in order to describe the metrical expansion of space! The metrical expansion of space, described by the RW metric, is *assumed prior to bringing GRT into cosmology at all*. The RW metric is NOT general relativistic in and of itself, but GRT---viz. Einstein's equation---is ONLY subsequently imposed in order to constrain the FORM of expansion that such a universe can take, depending on the possible energy-content of space, according to the theory. One can presume to describe redshifts through the metrical expansion of space *in any case*. Second of all, the inference from the redshift measurements, that space is *actually expanding*---INSTEAD OF, as you say, associating redshift with recessional velocities of galaxies moving through space (which is NOT what's actually done!)---is by far the MOST NATURAL inference to make from the evidence (see below). Thirdly, Olbers' paradox is completely resolved by the standard model, which tells us that our particle horizon will monotonically increase, asymptotically approaching a FINITE comoving distance (i.e., finite coordinate distance in expanding space) from us (please see comments I posted on Abraham Loeb's site on Aug 13 & 14). Olbers' paradox exists only if the Universe were infinite in age and not (asymptotically) exponentially expanding. In the latter case, even with infinite age (e.g., Steady State theory), only a finite amount of light can reach any point in space at any time. Actually, (see, e.g., references to Krauss et al. in Loeb's paper) in exponentially expanding space light becomes completely undetectable after only 10^11 years.
I posted a reply to Peter Jackson yesterday on my site, describing in more detail the rationale behind the assumption of a preferred reference frame in cosmology, based on redshift observations and the *natural inference* that space is actually expanding (which, I MUST STRESS, does not require GRT *a priori* in order to construct an appropriate space-time metric). Here's what I wrote:
I thought I'd give some more details about why I think the cosmological evidence justifies the assumption---usually thought to be unjustifiable strictly from the point-of-view of relativity---of a Cosmic Time and preferred reference frame to describe the evolution of a three-dimensional Universe. To begin with, note the principal reason for inferring that the Universe is expanding: as Eddington wrote in The Expanding Universe,
"The lesson of humility has so often been brought home to us in astronomy that we almost automatically adopt the view that our own galaxy is not specially distinguished---not more important in the scheme of nature than the millions of other island galaxies...
"When the collected data as to radial velocities and distances [of these galaxies] are examined a very interesting feature is revealed. The velocities are large, generally very much larger than ordinary stellar velocities. The more distant nebulae have the bigger velocities; the results seem to agree very well with a linear law of increase, the velocity being simply proportional to the distance. The most striking feature is that the galaxies are almost unanimously running away from us...
"We can exclude the spiral nebulae which are more or less hesitating as to whether they shall leave us by drawing a sphere of rather more than a million light-years radius round our galaxy. *In the region beyond, more than 80 have been observed to be moving outwards, and not one has been found coming in to take their place*...
"The unanimity with which the galaxies are running away looks almost as though they had a pointed aversion to us. We wonder why we should be shunned as though our system were a plague spot in the universe. But that is too hasty an inference, and there is really no reason to think that the animus is especially directed against our galaxy. If this lecture room were to expand to twice its present size, the seats all separating from each other in proportion, you would notice that everyone had moved away from you. Your neighbour who was 2 feet away is now 4 feet away; the man over yonder who was 40 feet away is now 80 feet away. It is not *you* they are avoiding; everyone is having the same experience..."
So, if the basic inference is really justified, that the redshifts of galaxies outside this sphere are all due to the dominance of the Hubble flow over peculiar motions of galaxies (i.e., their motions *through* space), so that any peculiar motion (which includes our own) really does become increasingly negligible with distance according to Hubble's law, then of course it's justified to treat the peculiar velocities of all galaxies, including ours, as noise in the redshift measurement, and describe ourselves and all sufficiently distant galaxies that we model as remaining at rest at comoving coordinates of expanding space.
Therefore, even though our clock, here on Earth, doesn't measure Cosmic Time because we're moving through the Universe (as indicated by the CMB dipole anisotropy), from the point-of-view of cosmology this doesn't matter, and we *are* able to determine what the present value of cosmic time is, because the metrical expansion of the Universe (as we infer from the empirical evidence) totally overwhelms any [special] relativistic effects due to the random peculiar motions of galaxies [which would otherwise indicate that two randomly chosen galaxies couldn't agree on a cosmic time due to their relative motion].
In essence, since the CMB indicates that we're moving through the Universe a little faster than 0.001c, and by the cosmological principle and observations of nearby galaxies we infer that this velocity is likely a typical value, peculiar velocities of galaxies along our axis of motion would produce the largest errors to our assumption that we're all at rest with respect to a comoving rest frame, and these could be as large as (0.002 -- 0.003)c. But this value is much less than the cosmological redshifts we typically observe. Therefore, when inferring that cosmological redshifts are mainly caused by the metrical expansion of space, we're also inferring that all peculiar motion, including our own, is eventually negligible with respect to that.
Cosmology therefore demands an absolute foliation of space-time, against which all local space-time measurements, at all levels, can be made. I've discussed this in regard to general relativity in my response to George Ellis on Aug. 15, 2012 @ 18:53 [on my site].
Best, Daryl