A few comments:
Criteria used to create an ideal P2P Distributed Exchange:
I'm really presuming the word 'ideal' isn't in the above line. I'm not even sure if an ideal p2p exchange could work. Ideally I could trade you my gold bar for bitcoins truslessly, but there are myriad issues that prevent that. I think we should compartmentalise what we want these exchanges to do, more so than just 'a p2p exchange', and more like 'a p2p fiat exchange', 'a p2p fiat and cryptocoin exchange', etc.
3. It must transact trades almost instantaneously. When you are watching a graph of trades in your region and want to trade at a very specific time, you must be able to do so. (This is extremely important for arbitragers and other traders who help keep the price fluctuation down.)
There are two parts to a trade - matching and locking the orders, and transferring value. "When you are watching a graph of trades in your region and want to trade at a very specific time, you must be able to do so." Really I think this means "When you are watching a graph of trades and you would like to make a trade at that current price, you must be able to do so, or have the same ability to do so as every other member of the exchange". Trades with fiat can't be instantaneous, but locking in a price can be.
6. It must hold and transfer a perfect representation of fiat currency. This encrypted device must be designed from the ground up to be transferable yet not counterfeitable, and be traded in the same denominations of real fiat money. It also must have a very high likelihood of being redeemable for the fiat money it represents, which makes it a 'digital IOU,' yet with all of the characteristics of sound money. (Divisibility, fungibility, Malleability, Scarcity, etc...)
Where did the 'value' term go? You've now removed the reference to generic money and are specifically talking about fiat. Also, a 'perfect representation of fiat' doesn't really mean anything because there is no perfect representation. Maybe cash, but you'd have to mail it or exchange in person; bank transfers are IOUs. I am not certain this new criterion is even possible in the world of fiat.
I can't come up with a better point 6 than we had before, but I think this change is not a good one.