Data going through any exchange needs to be transparent (i.e. Public) and independently verified. Is there no way this functionality can be built into the bitcoin client?
A distributed exchange is only possible if the nodes can hold, transmit, and receive at least two tradeable forms of value. So you need a client that understands both Bitcoins and at least one other system.
It seems possible to make a distributed exchange work without a trusted intermediary if the client broke up transactions into small amounts (say $1 to $10) and one of the low-cost money transfer systems like Liberty Reserve or Dwolla could do an end to end transaction in seconds. Then you could do a trade where you agreed on a price and quantity with another party, then the client did the trade by sending say $5, waiting for the agreed value in Bitcoins to show up, and repeating until the transaction was complete. Ripoffs are possible but limited to $5, and a reputation system can be used to keep anybody from pulling that more than once. New accounts with no reputation would get maybe $1 at a time until they built up some reputation points.
LR charges 1%, minimum $0.01; Dwolla charges $0.25 based on transaction size, so you need units of $25 to get down to 1%. Whether either system is fast enough for this is not clear.