You are right it will be hard to legalize the decentralized title registry concept in many countries, but with time as the governments and institute start accepting the uses and benefits of block chain and the authenticity it provides, i am sure they will start accepting this.
The concept sounds very interesting but I am not sure how they want to legalise this! It may work is some East European countries but I cannot imagine anything like this get legalised in West EU and US markets.