If you (as a bad issuer) decide to waste your money, absolutely you can do it and you can harm The related creditors maximum 20,000 Satoshi in each transaction as well. In this case no one will cover creditors lost. But how many of these crazy guys exist?
So you have no way of actually protecting your "customers" other than the faith of others not waiting to attack your protocol.
Also, you have not covered out the possibility of people using an accelerator in case of higher fees.
The next block confirmation fee is 50sat, the attacker uses a 20sat/b fee your protocol outbids it with 21 sat/b but the attacker uses an accelerator and gets the lower fee tx confirmed before our although higher has a chance of getting naturally confirmed.
There are multiple ways of cheating this outbid defense system it will simply turn out to be way too costly to keep it up. Why do you think nobody accepts zero-confirmation transactions? You're underestimating human nature, if it pays even a few cents per contract, someone would build a bot that that would wreak havoc on your system.
The Sabu protocol is the most decentralized system ever. Please study "The network architecture" in article.
Nope, it's not!
The doc-watcher clients are running by different businesses and/or privates.
Besides, you're relying on centralized services such as email servers, for broadcasting contracts so, who is going to pay for all of this?