people who deposit their bitcoins in a fractional reserve institution will lose their bitcoins at some point. it is inevitable as bank runs on fractional reserve entities are not a question of if but are a question of when.
Exactly. I accept that fractional reserve systems will eventually become, for some time, a part of the Bitcoin economy, and I don't intend to fight this through the protocol. All I care about is that, if I don't want to take the risk, Bitcoin allows me a clear way to isolate myself from it, by only accepting "in the chain" bitcoins, so I dont' suffer from the inevitable bank runs that will hit the people who try FRB (and do it without Central Bank Sugar Daddy to backstop them).
I don't have an analogous option with existing fiat currencies. Since central banks can print money to make up for any shortfalls and runs on banks, it doesn't do me any good to "only accept physical cash", since they can just inflate it right along with the pyramiding of loans. No one can do that, however, with "in the chain" bitcoins.