Why would I want to rely upon other people's needs for BTC or dollars to determine my own ratio of BTC to dollars?

Exactly my point. It's not worth it to the average person as a business model to make 3, 4 or even 10 dollars on the average exchange when it costs that much in gas (and time) to meet the other person in the first place. The idea is to build up your own network of trusted trading partners so it becomes as simple as picking up the phone and making the deal. I already have trusted trading partners with whom I can close the deal for thousands of dollars over the phone and settle up via mail, bank deposit, or in person the next time we meet.

I think it is impossible to have that kind of situation, unless the other guy is a market maker and is making profit with the deal, eg. selling above market price or buying below market price. Or then he/she wants privacy from banks and other electronic forms of payments, since  he/she would get better deal and less hassle exchanging the coins online.

If you really are able to call your contact whenever you want/need, and able to conduct business at market rate with him/her, it doesn't sound very sensible from the other guys viewpoint.

An additional comment: My trusted trading partners and I become friends and we don't charge each other commissions to make change.

There's nothing wrong with people making change as a business for a fee. My goal is to go beyond that as described above. Both can coexist - it's not one or the other.

What?  You realize that you can use a centralized exchange AND your friends, right?

I think calling this "P2P" is a bit confusing.  When I see that, I think about my computer communication with a bunch of other computers, not "person to person."  Maybe it should be "How and Why You Should Set Up Your Own IRL P2P Bitcoin Currency Exchange"

The major value to me of this thread is that when there are a lot of people who have their own IRL P2P Bitcoin networks (whether they transact through computers or not), the trading of bitcoin will be much more difficult to suppress.  The expectation in this article that any kind of ban will be ignored is one that the BTC community will want to help realize.  Setting up your own network is a way to do that.

I wonder if alternate currencies will catch on quickly enough to help very many people as fiat currencies harm them.  Having access to wealth with a key locked inside your brain and no evidence that you command that kind of wealth is remarkably powerful, and it's an ability everyone can have - but first they have to work hard to earn that wealth, and find the technology (BTC is only one example) that will support such a "personal off-shore bank".