It's possible that trading could be halted near EOD and prevent closing it out. But supposing they start liquidating 30min early the chance of that happening is extremely low. And they still have 2 days to locate before a fail to deliver. Is there any broker that allows this?
If you buy and sell the same amount intraday, there's nothing to settle on T+2, if I'm interpreting this correctly? https://www.dtcc.com/clearing-services/equities-clearing-services/cns
No brokers that I know of. Waiting for a broker to take the lead. If it happens, that would be another milestone in trading similar to the introduction of fractional shares.
Every short sale needs a locate before entering the order. The broker doesn't have have to borrow the stock if you close it on the same day. It saves a lot of paperwork. Again, you still have to make the locate before entering the order, which means that you have the ability to borrow the stock when and if necessary.
So it seems like there'd be a market for a locate-mill to rubber stamp every locate request, if the requestor contractually agrees to close every short position before 4pm and never actually borrow anything. In the 0.000001% of cases where they need an actual borrow, the locate-mill will have some small percentage of the shares set aside for actual borrows at an exorbitant fee.