It's not about all people being irrational, it's about humans having negotiations and softly defined deals when it comes to money. Bitcoin doesn't fit this scenario like human-powered trusted authorities do.

There's a reason why the legal system exists to offer you the case-by-case evaluation when needed. Many people have lost money through bitcoin, through hacks or poorly coded contracts, or to scams, or directly funded criminals and terrorists. Those people would have much preferred a little "legal hell" as you call it rather than no recourse at all.