Hi Gary,

First, many thanks for your feedback on cinexchange concept. We think your idea of building trusted relationship with users who can become 'senior traders' is great, and could help making our project better and much more efficient than Peerflix.
We could even push your idea a step further, in a slightly different direction though, in order to alleviate the verification burden from our shoulders...
How about the idea of using the 'senior traders' (ST) as ultimate third-party verifiers ? In other words, after some time of operation, we'll offer the most active and reliable traders the chance to become a 'senior trader'. Then, we could name one ST in each state to begin with, and eventually narrow that by each county and ultimately each large city (let's dream).
Each Senior Trader would have now the burden to verify a movie sent by user A to user B (with the appropriate additional stamp provided by user A). We'll select the ST living the closest to User-B's address, in order to shorten delivery time between ST and user B.
On the other hand, the ST will benefit from being able to retain each received movie (and watch it if he wants to) for 24h (for example) before shipping it forward to user B. The ST will act as a guarantor, checking that the movie sent by user A is OK, otherwise he would resend it instead back to user-A with a pre-printed note saying something like "Sorry, but this is not the movie requested by user-B" or "it's a fake, you'll be banned from cinexchange" etc ...
In this scenario, we're still facing the downside you mentioned about risking some USPS delivery issue (twice the risk of lost mail), but as long as there's a sender address, i think this is really the least of the potential risks, especially compared to the fraud issue Peerflix is already facing, or somehow encouraging by not actively fighting it.
Beleive me, we've tested Peerflix and actually sent voluntarily 5 'made-in china' illegal copies through Peerflix, just to seee what would be their reaction... : so far, nothing ! Not even a warning ! Worse : we actually could trade-in legal DVDs instead ! If we could do it, that means anyone could ! That means they're either not taking care of users complaints or closing their eyes as long as they make profit selling $0.99 trades. But i can't believe the peerflix users who received our illegal copies could all 5 not complain at all. At least one user has surely complained. And it was obvious they were illegal copies, the DVD were even with chinese titles on covers and very poor quality screeners. It's by the way very easy to purchase these copies on the net, and i wonder why google or yahoo accepts these companies to advertize through Overture !!! Just enter the keywords 'buy DVD' and you'll find at least one company offering movies with release dates due in 2 months !!!
By the way, that's also a weakness of Peerflix, or a proof of their fraud encouragment : they accept to reference movies in 'DVD i have' section, even though the release date is later than today! How can that be, hu ?!!! How can a user legally own a DVD that's not even out on the stores shelves yet ?!!! Just try to enter any coming-soon-movie in your have-list and you won't face any problem with Peerflix!!!
With Cinexchange, we don't even show up any coming soon movie in our browse list, exactly to prevent such a fraud ...
Let us know what you think about the above idea and check also updates on our cinexchange blog.
And if you're still undecided between Movie Rental and Trade DVD or Game Swap, make sure to visit www.cinexchange.com first (as early as march 2006), before signing-up with Peerflix or Netflix.
Many thanks for reading us and to Brad Templeton for this very interesting thread, helping us in serving the DVD trader community better !