Something like whoever makes a block with this transaction will be a judge does not work, because you need some qualifications to be a judge. For instance, judge should not be 12 year old. Please keep in mind that there is no restriction on age of miners.
In the proposed smart property / smartcoin / colored coin designs, the blockchain merely tracks ownership of an abstract digital object. Nothing more.
It is up to software and -- as you point out -- the real world to attach meaning to the digital object.