I think you make good points here, but I don't think it'll stop this from happening. There are ways to try to capture the intangibles, and the functionality is just too rich for us to avoid.
It's not the IoT that I'm arguing against, it's the reputation system. I think that it's fairly dystopian and unfair, and even if it comes into play as you've predicted eventually a significant percentage of people will just abandon or ignore it just like they do with many other reputation systems.
