Is it possible, at least in the early phase, to eliminate the need for legal documents with a voluntary reputation-based system?
This is not a complete description, but to give some rough idea...For example, suppose credit limits began very small per user (on the requirement they submit unique id and address to a trusted third party), and only increased over time with successful interest payments actually made on debts, and with proof of work done within the Bitshares environment (e.g. number of posts, brownies, github contributions etc). [In principle those that have already built a proof or work could begin with a higher limit than new users]. Because of the work and expenses required, there is no incentive to enter the system with the intention of absconding with funds.
At some later date, this work is of course a sunk cost, and a borrower/user may then choose to change their mind and not repay funds. But in doing so, they would be sacrificing the potential future benefits of the reputation and capital they have built within the system, as well as the impact that may have on any future endeavours they enter given that that it is permissible for the identity attached to the defaulted debt to then be made public by the administering third party.
Such a system may also encourage users to at least borrow something, and contribute in other ways, to steadily increase their credit limit over time.