No, he gets it, and you are still a little behind on the curve.  Having control of 51% of the hashing power of the whole network makes it possible to successfully attack the blockchain for a short period of time.  That period of time being one 10 minute interval.  The whitepaper doesn't go into detail about the odds of success of such an attack, other than to show how it's not really possible at all at less than 50%.  Having just over 50% of the network hashing power doesn't really give you very good odds of success past one block, and an attacker intending to deny transactions into the blockchain for longer than one block has to be able to be certain that no blocks can sneak in under him, for if one gets in and the next is built on top of that before he build one to overwrite that one and one on top to secure his false one then it become exponentially more difficult for him to overwrite two blocks back.  In practice, an attacker wishing to keep this up for an extended period of time needs at least double the hashing power of the network because it's like the attacker is trying to wade up river while the honest nodes are wading down river.  And even with double the rest of the network, some blocks are going to slip in and be covered up again anyway.  At which point the attacker has to choose between trying to overwrite two blocks and then write another before a third is made by the network or simply ignore the one that got away and overwrite the last one to take the network back.

It's not sensible for anyone to set up an exchange server in the one nation that is most likely to become hostile to Bitcoin, particularly when an American can set up an exchange in any juristiction he likes.

There is no way to fix it.  That is the normal progression of a niche forum going mainstream.  That's the way of the Internet.  The average poster's contributions trend toward the Internet's greater average, which is terrible.  I've seen it happen on a number of forums that I've participated in.

The 4x rule was not present in the first several months.  It was added as a security defense later.  Even so, this would not have had a large impact upon the max target.

Seems to me that Brazilians have beaten you to the party, but if you want more products from CA or SA, then start selling them!  Depending on where you are, consider selling handmade hammocks.  The kind without spreaders.  I've bought them myself from an importer on Ebay, and I love them.

I don't disagree with your general point, but the above statement is no longer true.  Silver in a mined, refined and elemental state (above ground stock, or basicly bullion, coins and jewlry) is much less abundant in our modern world than gold in the same state.  The reason for this is, although gold has been used primarily as a store of value even in the absence of a gold standard anywhere in the world, silver has largely lost it's monetary and investment value as a precious metal (up until last year, anyway) and it's value for the past 50 years or so has been dependent upon it's many industrial uses.  Many of those industrial uses consume the elemental stocks by using silver in chemical compounds that are difficult to reverse, (i.e. photography development) or by using the metal for it's electrical properties in devices that require it and are thus difficult to retrieve (i.e. satellites, aircraft/spacecraft avionics, military equipment and undersea cables).  So over the past 50 years or so, more silver was consumed in industry than is mined each year; although this may change with the recent rise in silver prices.  While pretty much all of the gold that has ever been mined can still be accounted for, as gold has very little industrial uses that cannot be replaced by cheaper materials.

Let me know if you ever go on tour near Louisville, Ky.

Yes, that's part of it.  Kept it too difficult for one, or even a few, average desktops from reaching 10 minutes between blocks.  Partly as a show of faith that others were desired.

Also, setting a max target also creates the metric that we call the difficulty.  The difficulty number is an estimate of how many times more difficult the target is to achieve statisticly as compared to the minimum difficulty of 1, which is defined as the max target number.  Just having the target doesn't help human beings wrap our heads around the concept, but the difficulty provides a relative metric that humans can get used to.

An encrypted wallet.dat file as default is in the todo list for the bitcoin client.  Feel free to jump into the fray and help if you have the skills.

Mine has not been paid out...

"By local transactions, I assume a minimum capability of a local wallet.dat, the ability to use bu.mp (or similar) to transfer addresses, and the ability to create transactions in the absence of working Internet access.

I pledge 50 under these conditions"

I'm going to add a new condition, the system needs to be working on my Samsung Intercept by July, or I'm cutting my pledge in half.  This pledge has turned into a large chunk of what I have left.

Probably not.  But I contest that what you assume would happen once competing currencies exist would actually happen.  Bitcoin has a strong first to market advantage, so any other competing currency based upon it would have to have some dramatic advantages over Bitcoin.  If a large Western government (i.e. the United States) started such a bitcoin copy with legal tender advantages, that chain would probably become more widely used, and thus more valuable.  That's assuming that no other aspects of Bitcoin are changed, most importantly the cash-like ability to trade anonymously.  I would doubt that if the feds ever do a bitcoin clone that they won't put something in there to identify users, which will inevitablely be used against users either by the government itself or by hacker-thieves.  Just the possibility of such a thing would inhibit adoption.  If nothing else, foreign users would be reluctant to use such a thing.  A corporation might not do the same, but such a corporation would become a central target of governments, and thus a victim of their own successes.

Is your system clock correct?

Slow is irrelevant, if they are efficient.  There are millions of them.  But if it's not possible, it's not possible.

You can't make that claim.  You don't know this.  Also, you don't know what others pay even for power.
IF they bought it to play games, yes they do.
They probably wouldn't have, but some will now.
Just because you can't imagine it, doesn't make it wrong.  Again, you need to ask for your econ education funds back.

There is a point for any of these guys that continued expansion of their own cluster becomes a case of diminishing returns.  So at some point, they will stop expanding.  I didn't say they would sell the cards they already have installed, but the IP of their design.

Supposedly ArtForz has already developed a custom run of asic based pci cards for his mining cluster, he just hasn't released his design.

Um, no.  I think that you aren't quite getting it.  There is no owner for the block, the block isn't traded.  There really isn't any object that can be called a coin, not even a digital object.  The blockchain is a massive, collective ledger system.  The blockchain tracks addresses by recording the transactions that grant and remove bitcoins from them.  A complete blockchain has all of the transactions that have ever been recorded, but it can be pruned of transactions that have already had their values spent again by their owners, after those new transactions are old enough to know for certain that they will not be reversed.  This is the purpose of the 'merkel' hash tree that defines the structure of a block, so that spent transactions can be deleted from the block without breaking the validity checks that new clients must perform on the blockchain upon bootstrapping.  The blockchain will eventually grow to a massive dataset, but not nearly as fast as if every division of the coins required that the block itself be duplicated and signed again.

May you be touched by his noodlely appendage.

This is an issue, to be sure.  However, ASIC's can be mass produced on a level vastly more cost effective than equvilant FPGA's.  So much so, that if the crypto is changed, it would still be more cost effective to buy a second ASIC mining card than to buy one FPGA card.

You need to return to your Econ prof and ask for your money back.  You are overlooking some important variables.  First off, professional mining cannot compete over the long term with individual miners, who have near zero facilities costs.  Some don't even have capital costs, because they are presently using GPU's that they would have bought regardless.  Eventually, Purpose made bitcoin mining cards will become available.  For no other reason than once all those heavily vested professional miners (such as ArtForz) reach a point that their profit margins are squeezed too much to continue to expand, they will monetize their hardware designs by selling the cards for individual users.

Perhaps a financial institution breaking ranks, but it could also be the CIA looking to test their intentions for bitcoin on idle hardware.