But presumably you realise that you can "tunnel through" regulatory barriers precisely because hardly anyone is using it? If Bitcoin started to get big in retail, the regulators would be all over it for all the same reasons.

Also, if the intermediated FX was less expensive than the direct cross, I would expect that the e-wallet provider would just centralise the Bitcoin transaction. Why get the punters involved?

Realistically, Bitcoin would only have value as a currency if there's a substantial economy denominated in Bitcoin. Like there has been on the dark web.