But, just like cash, why couldn't you call the cops or "beat him up" when the product is not produced? Nothing with BTC prevents you from doing this.
What you are proposing is similar to eBay or PayPal, and is ripe for abuse just like those methods. You could easily claim you didn't get object X from a BTC transaction and that transaction gets yanked even though you did get object X.
The only way to make it trouble-free is to have a real mediator that can handle disputes. We would all pay to have this mediator (lets call them an escrow), in between each transaction (lets say 3%), and they would be the ones that would mediate the dispute, or take the hit if it can't be resolved.
If that sounds a lot like a CC processor, it is.