I agree that there is room for creativity here. There are so many things to try. For instance, I noticed that ViaCycle seems to be piloting on college campuses. Might it be possible to put docking stations _inside_ of academic buildings, requiring a college ID swipe to get in, and possibly being within viewing distance of a building attendant?
There are quite a few cycle hire alleycats around the world. The London ones are fun.
One of my friends rode the Dunwich Dynamo on a cycle hire bike. 200km overnight on a bike that you couldn't service or fix a puncture on... pretty brave.
By the way, stashing bikes behind locked doors is actually what the "OV-fiets" plan in The Netherlands is doing (they are more like lockers, really: http://3.bp.blogspot.com/-PeUfIZbrzY4/Ti8hHZCsLyI/AAAAAAAAAE...), and it works quite well. As a bonus, you can also rent those lockers for your own bike.
http://www.bromptondock.co.uk/
Then you get one of the best folding bikes, perfectly good for general use too.
They have plans for long-term hires too so you can use a bike daily and guarantee it is there for your commute. In the UK these Brompton Docks are mostly located at rail stations so that you have a bike waiting for you at the end.
It's a stretch to say "This will never work!" when something already is working, and avoiding the specific issues complained about.
http://blogs.montrealgazette.com/2012/03/16/bixi-raising-mon...
"In total, the Montreal operation will bring in $7.4 million. Bixi will spend $7.3 million on operations, marketing, administration and research and development."
That's for 2012. Projections aren't results, but things don't sound too far off. What are you basing your statement on?
http://ruk.ca/content/how-use-copenhagen-city-bikes/
It's a free system, because the 20 kroner coin that is used to unlock the bike is released when the bike is returned. These bikes have 20-inch wheel, which are non-pneumatic. Single-gear with a coaster brake. And weigh about 50 pounds. Also built like tanks. As a tourist, it increased my enjoyment of the city by a factor of 10.
I remember that just a few years ago (in 2000), Amsterdam aborted a pilot program for public bicycles, because they all got stolen or vandalised [1]. Since 2006 a new nationwide scheme is being operated by the country's largest train company and it's doing great.
I currently live in London and the Barclays Cycle Hire scheme, operated by the TFL, is pretty successful. Successful enough to recently get expanded to cover a greater area [2]. It's not just popular with tourists, but also with people who use it to commute to work. I rarely see a bicycle vandalised and you have to be an idiot to steal one.
Some differences that I think make the London bicycles successful, whereas other plans failed:
1. To hire a bike, you need to either rent one on the spot, or become a member. In both cases, you are using a credit or debit card, knowing that you will be charged if the bike gets stolen or vandalised on your watch. They are also linked to your name.
2. Hiring a bike gets progressively expensive as you keep it longer, so you are likely to return it to a docking point sooner rather than later.
3. The bikes are ugly, heavy and instantly recognisable. Not something you'd like to keep home.
4. The bikes are built like tanks. I don't think it's easy to remove things like bicycle seats etc. at all.
5. The scheme only costs slightly over £50 a year. That is how much I pay in maintenance of my own bike.
6. Even if you buy a bike in London, you cannot always park it at your home or workplace. Renting allows you to bike and just park it in a docking station in the city.
The London bike plan also has plenty of problems (no available docking points, AARGH!), but overall it seems to work pretty well. I wouldn't discount the concept altogether.
[1] http://nl.wikipedia.org/wiki/Witte_fiets
[2] http://www.tfl.gov.uk/corporate/media/newscentre/metro/18137...