BitUSD should only be brought newly into existence when it is trading above the value of USD (extra demand for the extra benefits of the bitAsset version of BitUSD)
I suggest we use feeds to set a floor for shorting bitUSD. You can short but it won't be matched with buy orders unless it is above the median feed price. You can let the market otherwise operate freely and still use the moving average to trigger margin calls.
Here is my take on the problem. The problem is the Bitshares X interface. All of my problems have been with the interface and not with the market technology itself.
1) The interface should alert us to opportunities based on either our trading patterns or our trading mode which we select.
2) We should not be expected to "know what to do" when events happen. We have to be guided by signals and most of us will take a good profit opportunity if we know it exists and know how.
So in my opinion priority number 1 should be to improve the interface so that opportunities signal to the user in the GUI, or to their email, SMS, or whatever they provide the client.
For example I might want the client to send an instant message to me on Skype and tell me I'm missing an arbitrage opportunity. This would be simple to write as it's just a bot (a simple script) but it's not clear how to go about automating things like that. We need instructions, scripts, bots, better signalling, there is a lot which goes into a good exchange.
The interface has to do a better job relaying information about the market and signalling market participants of profit opportunities. The sad fact is we are missing profit opportunities because of lag in the time to discover them.