Note: I am not a lawyer.



The best part is that producing fake bitbills in and of itself is probably not illegal.  Of course, using them to obtain goods and services is probably fraud, but making a bunch of fake bitbills with no keys inside and selling them to someone as a batch of fake bitbills (for that second party to do with as they please) is not against the law (save whatever copyrighted image is on them, which is a civil matter).

The problem with the OP's solution here is one of trust.  It's the same reason why bitbills are doomed to failure.  There's no way for the recipient of a payment to be assured that nobody else has the keys that can be used to transfer the coins.

When you generate your own key and the sender makes a public transaction transferring those coins to you, you can be assured that nobody but you can transfer them.  When someone emails you a wallet.dat or hands you a bitbill, there is no assurance that someone else can't one day spend those coins.  If you want them to be permanently safe, you have to transfer the ownership to a new key, and that involves the blockchain.

I'm not really clear on why everyone's trying to invent coin transfers that avoid the blockchain.  They all involve some sort of trust scheme, and with smartphones approaching free (along with mobile internet connectivity) shortly we will all be speculating idly.