It gets even worse when you consider that people can (and I'm sure some actually do) transfer bitcoins by simply transferring private keys. In theory, you might send someone funds, and they don't even move from the address, but ownership and possession still gets transferred.
But if you do that you have to trust the one who gave you his priv key, because he could have a copy of it enabling him to spend the coins too. So it's not a very safe way and i doubt many people are using this method.
Yeah, I can't imagine it's very common; I'd think it would likely only be with people who trust each other significantly.
But then, you never know. Casascius publicly advertises his physical bitcoins; someone could claim they do the same on occasion for a few folks, and as long as the private keys aren't kept in a wallet they frequently use, one couldn't prove that they hadn't done this.
