Look at what price in Bitcoin things are being sold at anywhere in the world, look up the dollar value of those goods being sold for Bitcoin, and there's your going market rate. Even if Bitcoin becomes 100% illegal and subject to a bloated federal War on Bitcoin, it will still be legal for people to publish going exchange rates.

Of course it will work globally. And yes, you decide the value individually. What is the most common outcome when an individual allows/trusts someone else (central authority) to decide the value of a currency? Why not place that responsibility in your own hands. Do you really need someone else to tell you what the value of your currency is so you can plan how to spend it? If so then stick with a fiat currency and all is well.

If trader A knows he can buy screws/nuts to create his widgets using bitcoins and trader B wants a widget and will pay for it using bitcoins there is no reason for anyone else to be involved in completing that transaction nor does anyone else need to set a price for the widget. If a third party enters into that transaction they will most definitely want their cut for whatever efforts they claim to have contributed.

Why do you need to "tie" bitcoins to an alternate currency? This is an issue that is hard to overcome and wrap your head around and yes I fall for it sometimes too. The value of a bitcoin should never be based on some other currency although it almost always is. You need to look at the value of a bitcoin because you can trade it for some good or service directly without exchanging it for another currency. Once you can trade bitcoins for enough goods or services that you can live your life without participating in another currency then Bitcoin has won.

You will still be able to trade Bitcoins for dollars in the US. Barter is 100% legal.

Let's say they're determined to close it down. They could port scan every IP in the US and put people running the software in jail. Then you switch from raw TCP connections to Tor or something like that. The Government would need to be extremely repressive in order to stop BitCoin. As in putting people in Jail, for running some software.

That's the nice thing about being decentralized. At most they can close Mt. Gox, but then another mtgox will open somwhere else. In fact, Mt Gox is the Achilles' heel at the moment.

Someone, somwhere, will allow you to exchange Bitcoins. Be it in Japan, Switzerland, Isle of man, or Sealand. It will boom and crash, but it's too convenient to completely fail. It just must fly under the radar long enough.