But the way this is implemented is "credit card companies will take 3% of every transaction they perform, and then give back a very small portion of that to counteract fraud". The power we give these organizations - basically a 3% tax on every transaction - is mind boggling.

The credit card companies don't actually don't give up part of their 3%. Chargebacks are up to the merchant: http://en.wikipedia.org/wiki/Chargeback_fraud.

Compared to the spread and inconvenience on $ -> bitcoin -> $ transactions, that's quite cheap.

Keeping bitcoin online enough for convenient transactions carries the small but important risk of losing your entire wallet.

True, and there are benefits you get for that 3% (rental car insurance, reduced cost of a mugging, etc. etc.) but I still wonder if cash (not necessarily bitcoin) would be better for the system as a whole for everyday purchases.

Keep in mind that cash has costs too. It has to be counted and secured. You have to hire a security company to pick up deposits and most banks charge for cash deposits over a certain amount.

But then that tax gets selectively reimbursed via dividend to shareholders. Upward redistribution.

There are externalities to this "you don't have to worry at all about the security of your credit card info" feature.