I don't have the details of ripple. However, based on the known info, it seems to have 2 fundamental problems:

1. double-spend. It seems ripple uses trust instead of mining to prevent double spend. Even if an IOU is issued by a trustworthy entity, people spending it may not. In contrast, in a colored-bitcoin scheme you only need to trust the IOU issuer, and the rest is protected by mining. If there is a trust-less and decentralized solution without any kind of proof-of-work or proof-or-stake, it would definitly be a bitcoin-killer (but I don't think this could happen).

2. Trust and anonymity are fundamentally incompatible concepts. Normally people won't trust an anonymous entity, especially for real money (the exceptions are anonymous services such as SilkRoad and TorWallet, which the users also demand anonymity).

-In real life banking, you won't get a credit card without showing all AML documents and proof of your salary. These sensitive personal information is kept by the bank and is (supposed) not to be disclosed.

-In bitcoin, which is decentralised, users have no choice but disclose their transactions to the world. On the other hand, mining makes bitcoin trust-less and user's identity is irrelevant. Therefore, bitcoin could be anonymous/pseudonymous.

-Ripple, however, is a decentraized web-of-trust system. This means all transactions have to be linked to entities in the real world. Who would like to let everyone know their  account balance? Even worse, imagine a transaction like this: Bob sells a HD5970 to Calvin for a sex IOU issued by Ann. Is it going to be permanently written in the blockchain and known by everyone forever?