While I agree with both you and gtv in many respects, shorting is comparable in a way, to guns. The only reason we still have the right to firearms is because it is written in the U.S. Constitution.
Great Britain, on the other hand, realized that to control misuse of guns, they had to eliminate ALL guns from society.
While I believe we should always have the right to bears arms, I just don't see why shorting of any sort is so damn necessary that it should be continued. If they can't adequately control it as a whole, eliminate it all together, just like GB did with guns.
Supply and demand will dictate the market just fine, without shorting, and the resultant naked shorting. And yes, in the very least, if shorting is allowed, it should be with shares not 'borrowed' from someone else. IMO, if shorting is allowed, it should only be in the form of 'boxing'.