Building a decentralized method of reporting stolen bitcoins would be challenging, but not impossible.
I agree - due to the public availability of all transactions it should be a piece of a cake. Much easier than with cash.
Some automatic lookup for "stolen coins" should be possible by a future client.
Just, how would you deal with the cases a theft was reported after the thief traded them already to an unknowing user? Should he/she then be forced to pay back the coins, which he/she legally and in good intention obtained?
They are not going to want to accept a digital currency that they can loose if a computer fails or that can loose value while the transaction is taking place.
For the computer fail: I think this is not different to actual cash. You most likely will tranfer the money on a daily basis to some kind of bank, just like you do in reality. With the pluspoint, that the "money transportation" is muuuch cheaper.
For a typical transfer, it takes quite awhile to "Confirm" the transfer. If a retailer accepts bitcoins, what are they supposed to do. Have you transfer them to their wallet and have you wait 30 mins to a hour for a decent number of confirmations?
I agree, this is a valid point. Instant payment will be difficult.
You could work around for certain types of businesses which either take some time (like a dinner, just ask for payment after order and you will have some time while the guests are dining to get your confirmations) or where shipping is involved (another hour delay usually does no harm).
For instant-sale of smaller amounts you just have to accept the risk that you will suffer a double spending attack. Are there any statistics how often double spend attacks are currently happening in the bitcoin network? So is this a real thread, or just an academical one?