You misinterpret the argument. An IOU can be determined as money. The problem with Ripple and most fiat systems is that an intermediary determines the value of the fiat apart from the value of the original asset. Not only do buyers of Ripple have to content with the risk of bitcoin (changes in protocols by developers) but they are also subject to the whims of the Ripple creators.
The network is only subject to the whims of the Ripple creators when it comes to distribution of XRP. That is not relevant for its use as an IOU network.
They create additional risk where it is not needed.
They most certainly do, but again it is only relation to XRP. For now, the network is fairly centralized, but any open alternative will be too at the start. Gateways are an essential intermediary to be able to actually convert IOUs, and companies are not breaking down the door vying to do this yet.
They are the good smith's who write IOUs that can potentially coming fraud against Ripple participants by changing the value of ripples independent of the value of bitcoin.
This is not an accurate portrayal of how ripple works. I have no vested interest in convincing you though.