You would not be getting my IOUs if you have not trusted me, you would have got the IOUs of someone who you trusted who trusted me's IOUs which are really being backed by my IOUs.
No! Not "backed by [your] IOUs" there is no such concept in Ripple. The IOU I get is backed by the trust I placed in the person/entity to which I extended trust. Unless they violate that trust I'm not effected. This is
exactly what I explained previously and in detail.