This "Free competition in currency act" will never pass.
Although it would be good for Bitcoin in some ways, it is a preposterous idea that would never work.
U.S. Federal Reserve Notes are backed more on our economics than on anything else, and if our government allows other "Free competition" it would basically make our money worthless. Our money is worth what it is because it is our money, and it does not take a genius to see that this kind of thing is really not in our country's best interest. Ron Paul only mentioned Bitcoin because it fits into his fundamentalist agenda. He is an extremist and although his small group of supporters are really loud and good at making themselves look big, when it comes down to it, they are a small group who carry little votes.
It will never pass
because it would work. It wouldn't make the US FRN worthless, it would simply expose the present reality. The US FRN is already worthless. It wouldn't be chosen by a market economy once the threat of force that 'legal tender' laws imply are removed. Bitcoin would not likely be the dominate alternative, however. Bitcoin exists in a niche because of coercive legal tender laws. Digital gold or silver certs would almost certainly dominate. There would be no practical reason for Bitcoin to exist.