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multiple exchanges could sit on top of this software and in effect decentralize the exchanges.

This model leads to failure. Each exchange would have a small order book which would discourage anyone from using it, ensuring that liquidity never reaches critical mass. Small exchanges cannot afford security audits so they are guaranteed to be hacked. Small exchanges also cannot afford FinCEN compliance, so if they touch USD then they're illegal.

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Agree that lots of small crappy exchanges with incorrect legal status will pop up, but that doesn't mean that at least one or two or three large-ish buttercoin ones won't start up. I think that will happen. So your point is partially correct, but it doesn't matter, because larger ones will pop up. There is nothing to stop Gox from migrating to buttercoin either.

I think the first credible implementation that doesn't have any major red flags in terms of trustworthiness or being run by amateurs will quickly siphon off volume from Gox.

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