I'm especially worried about the scenario where somebody writes a client which stores your coins in hundreds of little wallets, and sends and receives wallets instead of coins, completely bypassing the transaction fees and coin destruction. If everybody switched to that method, including the exchanges, then no coins would ever be transferred through the protocol, nor would they ever be destroyed. And people would definitely have a big incentive to move in that direction, even if it didn't get that extreme.
That's not going to happen. When you transfer a wallet you can keep a copy of it. The recipient must move them through the block chain or trust you. And if they need to trust you, you've lost the main advantage of scarce moneys. Now people have to trust each other and not be completely anonymous: people probably prefer Ripple for that. You can denominate IOUs in stablecoins, but again you need the decentralized price index system.
The destruction of money through transaction fees has other problems:
Is the transaction fee voluntary?
Why would the merchants include a transaction with a big fee sooner than one with a small one?
I think you need demurrage for this system even if you don't like it.
You are quite right that only trusted transactions would skip the fees and/or coin destruction. I hadn't thought that through all the way. So buying coins from a trusted exchange could potentially be free, but selling coins to the exchange would definitely require paying the fee since the exchange doesn't trust you.
If you want widespread adoption, there's a huge marketing advantage to getting rid of demurrage. I think morpheus' transfer fee idea has all the advantages of demurrage without the drawbacks. When the price of coins is at or above the target, there would be no fees or penalties of any kind.