The fact is that most people can't keep malware off their machines today. This has nothing to do with bitcoin. If you can't securely administer a machine, how could you possibly securely manage a local wallet? Further, you need to backup your keys, but most people can't administer proper backups either. Is it really a requirement that you need to be both a security and IT expert before you can use bitcoin?
It's a hard problem because even experts can't guarantee security, and as their services become more popular the incentives for thieves to spend a lot of resources breaking their systems only increases.
I agree with you on that!!!
In this system, even if the server is hacked, the attacker can't get your coins. The server only has one key, but you need two to access the funds. So although you lost one key, you've still got the same level of protection as you would have had with a client-side single key address.
Mike