I don't see why I would want to trust a series of inter-indebted gateways, but holding IOUs in Ripple, when I could either:
There is no reason you
must do so, but for each of the alternatives you mention there are reasons why some might choose to do so.
1) Trust the gateway directly (example by just hold my USD or Bitcoin directly in my Bitstamp balance)
You could do so, but then you are at risk of seizure / blocking by the government in whose jurisdiction the gateway operates.
2) Trust purely in the market/a single protocol (hold in Bitcoin wallet)
Then you'd have exchange rate risk and exchange fees because not everybody accepts Bitcoin right now.
3) Truth a government and hold fiat directly
Not a good course of action for many governments.
Why would i choose option 4:
4) Hold an IOU in a gateway that is holding IOUs from other gateways as the reserve for my balance, hold this IOU with a virtual currency protocol, having the virtual currency protocol controlled by a single governing body.
Maybe because you live in Zimbabwe, or maybe because you want to launder drugs money, or money made by providing seedboxes for BTC etc etc, or because your government has outlawed Bitcoin and you cannot trade it openly.