I don't think this is actually hedging at all, but rather allowing loans denominated in other currencies but settled in BTC...
Who decides on the "hedge"? The borrower when creating the listing or the lender when funding?
The loan is still denominated in Bitcoin.
When the listing is activated the aquivalent amount of the loan is calculated using the other currency.
When the payments are made, the amount to be paid in bitcoin is calculated using the current exchange rate (accordingly to MtGox) with the target currency.
http://en.wikipedia.org/wiki/Hedge_(finance)#Categories_of_hedgeable_riskhttp://en.wikipedia.org/wiki/Currency_riskThe loan is NOT denominated in Bitcoin. It's denominated in USD but transacted in BTC.
You should be able to work this out for yourself by considering the question "how much will the repayment be?". When you realise that you can ONLY give an answer to that in USD yoi've just worked out what the loan is denominated in.
Additionally, all such loans should have the amount of the loan AND the size of payments displayed in USD:
1. So lenders have it made very clear to them that what they get back will be valued in USD.
2. Because if the borrower wants to borrow USD then the amount they want to borrow is likely set in USD not BTC (i.e. they want to borrow BTC sufficient to buy something work X USD).
At present people are going to lend to these sort of loans without noticing that if they mouse over the USD/GOX symbol it tells them that what they get back depends on an exchange-rate. There should be no possibility for such misunderstandings.