So I should only "trust" people I expect to give me USD IRL?
For now, I think so.
Then whats the point of this thing? I could "trust" my brother to pay me back $500, or I could just call him and ask him to write me a check, send an ACH transfer, send me bitcoins, or give me $500 when I see him this weekend.
It depends what you're trying to do.
If you want to lend him up to $500 and trust him to pay you back, then Ripple is a great fit. He can also extend credit to you if you want to so you can both deal with other people flexibly. He can pay you back inside Ripple (say with balances from a gateway you trust). You always know who owes who how much. And you never need to pressure him to settle since you can spend the money he owes you (this, of course, assumes he holds balances you want or has trust lines that are useful to you). You can, of course, also settle in person for cash and adjust the Ripple accounting to keep it in sync.
If you just want to be able to pay each other money, then Ripple may or may not be useful. If you can easily exchange checks or use ACH transfers or hand cash in person, then Ripple probably doesn't help you very much. But if you each use different currencies or already find a use for holding funds at Ripple gateways, then Ripple makes those payments quick and cheap.
