Then, two transactions are created (but not yet signed); 1 that pays the seller their share and returns the remaining deposit to the buyer, and one that is the other way around (refund).
When the item is shipped / received, and everything is good, both parties sign the transaction to unlock the funds. If either side attempts to scam the other, they are out 1.5x the price of the object. It becomes both party's interest to ensure that conflicts can be resolved so the deposits can be unlocked.
In other words, it is escrow without the 3rd party.
There is more information here: https://www.reddit.com/r/Bitcoin/comments/215yn2/mad_ransom_...
Yes, I certainly see that as an option.
And perhaps a system like this needs more types of "special actors", e.g. for supporting alternative payment methods.
This isn't a pithy response, I'm genuinely curious how this kind of thing could be worked around. Independent third party mediator that can contact both parties to figure out what happened (perhaps incentivized with a % of the smart contract's value?)