• First off, I think this is just a privacy risk and merchants should stop accepting exact USD amounts. It's common advice to not use round payment amounts in BTC (send 0.00010004 BTC instead of 0.0001 BTC) because that makes it easier to figure out which is the change address and which is the payment. I hadn't considered that this was also an issue if you're converting round payment amounts from another currency to BTC, but it should be avoided. Thus merchants should perhaps charge something like $5.001 or $4.999 instead of $5.
• Second, wouldn't this start breaking down if BTC becomes a more common medium of exchange and goods are priced directly in BTC? You could argue by that point there'd be no reason to need a USD oracle at all (it'd be obsolete!) but it's something worth considering

I think it would be possible for BitDNS to be a completely separate network and separate block chain, yet share CPU power with Bitcoin. The only overlap is to make it so miners can search for proof-of-work for both networks simultaneously. The networks wouldn't need any coordination. Miners would subscribe to both networks in parallel. They would scan SHA such that if they get a hit, they potentially solve both at once. A solution may be for just one of the networks if one network has a lower difficulty. I think an external miner could call getwork on both programs and combine the work. Maybe call Bitcoin, get work from it, hand it to BitDNS getwork to combine into a combined work. Instead of fragmentation, networks share and augment each other's total CPU power. This would solve the problem that if there are multiple networks, they are a danger to each other if the available CPU power gangs up on one. Instead, all networks in the world would share combined CPU power, increasing the total strength. It would make it easier for small networks to get started by tapping into a ready base of miners.