There is an alternative I think, you first check if the sender's address has unconfirmed transactions, then wait a few seconds for propagation time, then for small-time purchase you can just deliver the goods, as race attack would have been infeasible and only Finney attack would work.
Besides, for online purchase of physical goods, there is no need to worry about confirmation time, since you have evidence for double spending, you can always refuse to deliver.
I agree that with the proper precautions (waiting a few seconds to see if there are double spend attempts, ensuring the transaction has a sufficient tx fee) 0-confs is enough for a point of sale transaction.
For online services however, there are two reasons why a faster block time would be an advantage: first, if the service offers withdrawals of bitcoin deposited, then they need to wait for at least one confirmation to ensure you're not withdrawing bitcoins that you double spent. Second, some services want to ship immediately upon the order being placed. Having to wait for a 10 minute confirmation versus a 1 minute confirmation before shipping makes a difference here.
It's also not convenient for a service to have to keep track of which completed purchases are still at 0-confirmations and wait until they have at least 1 before shipping. The merchant could more practically wait for 1 confirmation before confirming the purchase is complete with a 1 minute rather than 10 minute block interval target and avoid the need to wait for a separate 'shipping confirmation' after they've already confirmed the purchase with the customer.
Will the fraud losses be zero? Probably not but they don't have to. Especially for online merchants where CC fraud (and mitigation costs) is 5% or more on digital goods. Getting that to "only" 1% would be a windfall for merchants.
True, however we can look at the real Bitcoin economy to see that not every service will allow 0-conf transactions.
