That said, such logs are not necessary to trace back the connection which would be visible from both ISPs and possibly traceable by the block chain transactions.

The biggest problem I can see with this system is that the users who share their bandwidth will be the ones investigated if something illicit is done on their connection.

When you’re an organization providing a VPN service, you have ways to protect and defend yourself which are beyond the reach of simple users who know little about technology and the laws. This alone is a major reason NOT to share your connection with strangers.