No, this would be voluntary to each individual. No central control. If you are convinced the coins were stolen, you can blacklist them to avoid transactions that involve them.
The point is that as soon as you put it in the client it becomes a vulnerability that
may be exploited by central control. Masses will voluntarily accept such central control with enough propaganda/marketing.
Obviously no one would blacklist coins without solid proof.
That is naive. I'm sure a lot of people will happily blacklist any amount of coins because their congressman is photogenic or free coupons at Starbucks etc.
Yes, it would open the door to abuse by reporting other people's coins. Again, it would require hard evidence to convince me to black list an address.
Maybe you, but plenty of others will happily believe the moon is made of cheese. What if "we must freeze Pakistan's coins because they harbour terrorists"? I'm pretty sure a lot of people would do that. Put Iran on the list. Put some geezer in a rival company to the congressman's daughter's on the list too, noone will know. This is absolutely rife for abuse because you are exchanging cryptographic strength for trust in third parties with possibly limitless budgets for propaganda (OK, I *do* believe the moon landings happened, but you get what I mean. Something like that is seen as ironclad evidence by most, but could actually easily be faked today).
Don't think of this as an individual choice here, because masses are comprised of individuals, and masses are stupid.
Coins would not be lost this way, after enough time, there would be new users that don't blacklist those coins and they would be clean to trade.
You cannot predict how blacklists would be handled. If automated, they could become permanent, hereditary etc. (because you know like, we wouldn't want Hitler's grandkids getting grandpa's army building stash, you know..)
You could also blacklist coins that are linked to known "bad guys" around the world. Bad example time: Say Hitler used Bitcoin to build his army. When he buys some munitions (or whatever else) somewhere and his Bitcoin address is leaked, the people of the world could freeze his funds.
Terrible terrible idea. See above about every country and ethnic group that doesn't like eachother. This just opens up the door for perpetuating all the political, religious and ethnic feuding misery of every conflict in the world. Bitcoin must remain untainted by this.
Also, people could refuse to do business with known companies or individual that they disagree with.
Same as above. What if Alice has strong principles and blacklists every coin coming from Monsanto, Halliburton, BP, Microsoft, Oracle, Goldman Sachs etc. etc. (totaling say 1 million BTC). If cousin Bob (net worth 1 BTC) ever receives payments linking back to any of these, the amount which Bob can transfer to Alice decreases by that amount. If 5% of the economy is tainted by these companies every year, after a few years Bob cannot transact with Alice at all. And that's only if only Alice, voluntarily, blacklists on her end. Supposedly everyone is connected to everyone else in at most 6 steps on average. That means Alice will get isolated and go very hungry after a while.
You are completely disregarding the network effects here, this idea has just not been thought through.
