Yeah, I get that using a new token for this sucks. But I don’t see an alternative except locking a BTC collateral up with escrow, which is worse, because it is not trustless.
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In this design, it’s clear that 1 $TRADE will always be worth around 1 USD: It’s not a speculative asset.
When you launch a token to an exchange, it's inevitably going to be exposed to the end-user by it to speculate on. See USDT for example.
Smart contacts (by this I mean scripts with lots of paths and conditions in them for alternate transactions) can enforce atomic swaps up to a certain point, going back to the LN example even the specification relies on the user to manually broadcast the penalty transaction if the handshake is violated. There's simply no way to broadcast the transaction from within a script, it's not a programming language.