@tonyk A. You simply cannot make BTS untradable on centralized exchange. This proposal will simply give one exchange, or a small combination of exchanges, a stranglehold on the exchange of BTS. The first exchange that puts in the work to develop the backend for BTS exchange will gain a quasi monopoly. Thus, Bitshares could end up worse off from this proposal... going from traded on many exchanges to one or a few exchanges.
B. You cannot simply make bitUSD the "main" smartcoin that is traded against BTS. Some people, specifically China and Euros may prefer bitEUR or bitCNY. This proposal effectively fragments the main BTS/BTC market into several (possibly many) smaller markets.
Thus, each market separately will have a smaller amount of liquidity than if we were to continue BTS/BTC being the main market... possibly much less depending on how many smart coins are used in this manner and the popularity of other smart coins other than bitUSD. It is a possibility that to get the best price on BTS you would have to buy 3 different smartcoins, then trade all of them for BTS.
C. It is unclear to me how you plan to pay worker proposals and such in bitUSD without autonomously shorting bitUSD into existance or printing unbacked bitUSD. Several community members are vicously against such practices, as I found out when I brought up my proposal.
D. Even with creating a separate asset, and not freezing BTS, I still see a lot of issues arising from the transition period. What would be the value of the original BTS tokens, if anything? What happens when people purchase these tokens after the transition period thinking that they are receiving equity in Bitshares ecosystem?
There are other issues that I can think of that may arise, as mentioned in my first post, but I don't have have time to explain.