Absolutely everything that you said can be said about Bitcoin also.  So I don't know why you are even here if you don't accept the fundamental tenents of what makes a virtual currency like Bitcoin viable.

No one else in the world has to use this currency.  But by making it the only virtual legal tender acceptable by the U.S. Government, it will have an immediate legitimacy.  Once people start paying for government services with it, it will have value and an infrastructure.

I am not sure that everyone understands my proposal.  My proposal is that the exact same protocol (ok well maybe with some very minor tweaks to the block schedule) as Bitcoin be used for this.  The only difference is in the initially seeded block chain.  Instead of Satoshi getting it all, and then the early adopters of Bitcoin getting a huge chunk of the rest ... it starts out fairly distributed to all U.S. citizens.

Also as to an earlier poster's point, I am not calling this Bitcoin.  I don't think I have ever called it Bitcoin, although it uses the exact same protocol.  I call it the U.S. government legal virtual tender, of course they'd have to come up with a better name.

Anyway, I'm done replying to naysayers without any actual technical input to give.  I'll be back when someone has something interesting, relevent, and informed to say.  Thanks.