Physical deeds are forged all the time, and sorting it out requires a quiet title lawsuit. A stolen electronic deed would be handled similarly. You would ask a court to declare the stolen title invalid and issue a new one.

so if the court is doing that, then we have a centralized power... the opposite of the idea of blockchain.

Just to make sure it's clear, I'm not saying that courts should have any special power to manipulate the blockchain, just that they could declare a stolen title invalid, and issue a new one in the form of a new colored coin on the blockchain.

I'm not claiming any benefit related to government control, just that escrow would be unnecessary.

At which point the blockchain is not needed.

A centralized source will be held accountable to the legal demands, thus as trustworthy as the blockchain yet significantly more beneficial for all users in terms of speed, storage and utility.