Phil Dann Ward: There is one flaw in your protocol regarding lately discussed transaction malleability issue. You cannot be sure about a TXID of transaction until it is included in the blockchain (and even then, there could be a reorg later, but let's assume that's highly unlikely). And yet, this protocol relies on an assumption that a lock time transaction will be able to spend the funds using a specific TXID as an input. If in the mean time the TXID gets changed (someone manages to insert a modified version of the transaction in the blockchain), this will fail.

This problem (which is a problem for many Contract-style protocols) will gradually fade away as Bitcoin devs address the malleability issue somehow.