They did not say that. You are putting
your words into the mouths of 18th century jurists
[ ... ] It's not clear to me why you emphasize the 'physical note', because with most modern currencies, the owner rarely actually possesses a physical note of any kind.
That lawsuit, and the crucial verdict, was about property of a
specific physical note:
In the litigation Mr Crawfurd sought to vindicate a £20 Bank of Scotland note which had gone missing in the post and turned up some time later in the hands of the Royal Bank of Scotland.
The verdict merely said that
that banknote was no longer the victim's property, because its current holder had received it by legitimate means in good faith:
Victory for the Royal Bank was obtained only by re-characterising a rule of bona fide consumption, by spending, as one of bona fide acquisition.
But the verdict obviously did not say that stolen cash ceases to be the property of the victim just because "cash is fungible". Police routinely seize money from cash thieves and return it to the victims. If the thief exchanged the cash for other valuables, without the merchant's knowledge, the cash then is "clean", but the valuables are still seized, as being conceptually the victim's property.
That being said, I can't imagine that the legal powers that be would not see X amount of bitcoin returned to one from whom it had been robbed, if the robber could be positively identified, just as they might with X US dollars that had been stolen. It's also not clear to me why you think legal remedies for theft of bitcoins must differ significantly from what they would be for other effectively virtual currencies, like US dollars.
I am sure that the police in most countries would, in principle, consider bitcoin theft as any other property theft. And it seems that some people have succeeded in convincing the police to investigate bitcoin thefts. For example, check
this thread about the Intersango scam; and I understood that the MtGOX liquidator has asked the Japanese police to investigate the disappearance of some additional 27'000 BTC.
However, catching a bitcoin thief will be quite hard in general. The transaction that stole your bitcoins may have been issued from your own computer, automatically, by some self-erasing malware, while the hacker was not even online. You can point to the stolen coins in the blockchain, but the thief may leave the coins there for years, and no one can take them from him. Or he can hack into an old PC in Mongolia, and from there tumble the coins so thoroughly that it will be practically impossible to trace them to his person when he finally spends them.
AFAIK no theft of bitcoins by outside hackers has been solved, by the police or anyone else. In several cases of insider theft, the culprit was identified with high probability, but I don't know of any case where the evidence was sufficient to get a conviction.
If they could catch DPR and seize his bitcoin I can't see why it is fundamentally impossible to catch a bitcoin thief.
DPR was not a bitcoin thief. He ran a large website selling illegal drugs, and was caught for that. They tailed him digitally for some time, hacked into his computers, collected the evidence they needed (and perhaps the private keys), and phisically grabbed him only when they felt that they had enough evidence. As others pointed out, that investigation was relatively easy, because SilkRoad was a continuing operation, with lots of traffic and many people involved.
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