I thought of a way to make transactions instantly settled without the need for waiting for confirmations.

Alice pays bitcoins to Bob.  Meanwhile, Alice has a few bitcoins on deposit at MyBitcoin, and MyBitcoin provides a transaction guarantee service for profit.

For Bob to be assured that he will not lose to a double-spend, as soon as Bob's client hears about the unconfirmed incoming transaction, he makes an API call to MyBitcoin asking them to guarantee Alice's transaction, providing the transaction ID N as a parameter, along with a one-time password provided by Alice, so MyBitcoin knows whose funds are backing the guarantee.

MyBitcoin confirms that it has enough of Alice's funds to make sure that it can charge any double-spend back to Alice.  It puts Alice's funds on hold for 6 blocks, and then delivers a digitally-signed promise to Bob, that if transaction N later becomes invalidated, it pays the claim.

Bob now feels comfortable delivering his product instantly.

MyBitcoin charges merchant Bob a small fee for the convenience (since this is a service that insured the merchant in the first place).  It's a free service to Alice.  And if Alice paid from her MyBitcoin balance, the guarantee is granted automatically without holding any additional funds, because MyBitcoin already knows that nobody can invalidate her transaction other than themselves... yet it still makes a profit for MyBitcoin.

If the API is kept generic enough, any trusted party can be substituted for MyBitcoin.  Other trusted parties could hedge their risk in other ways besides requiring balance on deposit (e.g. to those with good credit, etc.)