Pardon my ignorance as I try to wrap my head around Ripple, but couldn't it just use BTC instead of XRP?
Not any way that I know of. There's another thread where I solicited suggestions for a way to make that work and nobody came up with any.
How would it not work as well?
The primary problem is that there's no known way to take Bitcoins off the Bitcoin chain such that they can be returned to it that doesn't require a central authority or have other significant drawbacks. There are a variety of other issues that were discussed in the thread where that was first proposed
Is the only reason for it not working as well with BTC is that Opencoin wouldn't have a stock of XRP to hand out to promote the system? If that's the only case it doesn't sound like a good reason.
That's not the only reason, but that's a very good reason by itself. Getting mass adoption is far from a sure thing. Being able to make it free for as many people as possible for as long as possible significantly decreases the chances that all the develop effort will be for nothing. Not to mention, XRP funds the development and ensures there's a healthy company standing behind the network.
If so I would assume that as soon as Ripple becomes open source a fork would be created with people opting to prefer their "free-ish" transaction fee be denominated in BTC as opposed to XRP?
Who would the BTC be paid to? Would those transactions have to take place in the Bitcoin chain? How would you ensure that someone couldn't game the system be being on both sides of that BTC transaction?
If so I would assume that as soon as Ripple becomes open source a fork would be created with people opting to prefer their "free-ish" transaction fee be denominated in BTC as opposed to XRP?
Joel, can you clarify that this is not one of the motivating factors for not open sourcing the code for the servers yet?
Since I don't think that's technically feasible, it's definitely not one of the motivating factors. There are too many unsolved technical problems to making that work, and I don't see what the pitch for this network would be -- "It's just like OpenCoin's Ripple network except there's is free and you have to buy Bitcoins to use ours" doesn't sound very attractive to me.