Step 3 seems unnecessary. AFAIK cryptonote coins achieve this same effect by including old transactions with new transactions in the ring signature. Steps 1 and 2 also are covered by ring signature coins. Step 4 might always be up to the sender--though zerocash or quantum money might be able to fix this in the future (not sure as most of this work is still fringe).
I just don't know enough about ring signatures - I wish someone would explain them to me.
My impression of ring signatures is that only a limited number of people can participate in each ring signature (I'm not sure of how it is arranged which ones participate). For example, in one instance when I tried only 10 could participate, so the probability is 1/10 that a member of the ring did the transaction, which is far less anonymous than the theoretical 1/N, where N=all users of the coin.
Also, I'm not sure to what extent one can analyze standard denominations and sums of them etc with Cryptonote coins. One problem is that some transaction sizes (small or large) might be less common than others, reducing anonymity. Is the transaction size hidden in a ring signature?
Also, when ring signatures includes old transactions, can this be arbitrarily far back in time?