Fractional reserve doesn't seem possible with BTC, no way you could lend btc you didn't have. But it would be possible to create a system that lent $ (or some other fiat) based on holdings of BTC. I don't see why anyone would, but thats a different question.
I would have agreed a while ago. There was just no infrastructure imaginable for Bitcoin IOUs (essentially just MtGox codes or the like) to become popular.
However, then Ripple came along. If it gains mass acceptance, it will make handling IOUs a lot easier, maybe even easier for most people than to deal with Bitcoin directly. And gateways like Bitstamp (and MtGox probably soon) will theoretically indeed be able to issue more IOUs than they actually have.