Bitcoin lacks fungibility, that is a major issue with it as a currency. Why do you think that things like colored coins can exist? The blockchain is public and all transactions are public. Inside an exchange many off the block transactions are done for speed and other reasons but that isn't the same as being "entirely fungible". Besides fungibiltiy doesn't have anything to do with short selling.
Your coins inside an exchange are entirely fungible. If you withdraw coins do you really think you get the same coins back. 
Bitcoins as a currency are fungible.Why do you think there was such a big issue with the recent USA tax interpretation, that indicated Bitcoins were to be treated as property?
Because this made them non-fungible for tax purposes.
Fungibility has everything to do with short selling, because you don't buy back the exact same coins or stocks or metal that you sell. You don't get the same dollar out of the bank that you deposit.
Yes inside of an exchange it is possible for bitcoin to appear fungible. This is the same with any other asset being held by a broker. However you have totally twisted the concept into something else. If someone shorts bitcoins, it doesn't mean it is any particular person's coins and the net effect of shorting is zero. There isn't anything special here. It also doesn't mean that bitcoin is fungible.
If you want free markets you have to accept short selling as well as options, futures and any other concept can be come up with. That is part of freedom. Exchanges can still verify they hold enough coins to cover everyone's accounts. These trading vehicles are available to everyone. It isn't a scam. That is true at least as long a naked positions are not allowed.
We are moving towards p2p exchanges and there will short selling, options and who all knows what. That is all apart of a free market place. Short selling itself is simply a tool.
If you are upset about the use of software, tough. Bitcoin is only software. Better get used to it.
If there is any scam here it is in spreading alarmist FUD. The only thing you have shown so far is that you are against free markets.