The outcome of some M of N contracts could be actually reduced to algorithms (e.g. betting on the value of MtGox_7day_USD which, I suppose, can be obtained programatically) - would you implement an interface where the writer of the contract can specify the algorithm which decided the outcome?
I don't think it is a good model. Outcome can indeed be controlled by algorithms, but it all depends on who will run such algorithms, i.e. you need to trust the service which does this.
Hmm. What if the algorithm could be contained within the transaction's scriptsig? So, suppose I'm betting on.... who the next pope will be. The contracting parties decide on their authoritative news source (e.g. cnn.com). When the next pope is decided, cnn publishes a page stating "The new pope is Alice" (yeah, revolution in the church, a female pope!) and they sign that statement with the bitcoin key which was presciently written in the original transaction. Now, since I was betting on Alice becoming pope, I simply download cnn's message and the signature, both of which match the transaction's requirements, construct a transaction with them, and redeem my winnings.
So, this would require the scriptsig to:
a) match the text "the new pope is Alice"
b) verify the signature from cnn
This would remove any subjectivity in the decision - you'd still have to trust your news source, but in any case, the outcome of the contract is defined. The news source *could* be corrupt and publish false news in order to profit.