> it seems pretty straight forward to me that lowering the number of parties involved in a transaction reduces the number of parties that need to be trusted

It increases how much you have to trust them. You can also build the same escrow system with anything. You don't need cryptocurrency for that.

> the rule of law doesn't cease to exist just because it happened online

Is there any legible escrow businesses for cryptocurrencies? If yes, how are they "less amount of parties involved" in comparison to Paypal?

> I haven't seen a coherent argument yet, but maybe I'm missing something...

Maybe you don't want to?