In other words, I propose an option system where there is no centralized counter party risk. The protocol makes sure settlement occurs before margin is depleted.
That's essentially the point of the counterparty protocol.
For decentralised bets you can use certainly make use of it.
In Counterparty, I can't hold my value in any altcoin (because I like the features of that altcoin, e.g. anonymity, transaction rate, more trusted, etc) and then have my value pegged to any unit-of-account. Thus Counterparty can not do (entirely) what I have proposed.