I'm going to agree with your point A - I think it unlikely that any politician would commit political suicide by an outright default. Things would have to get pretty bad for that to happen.
However, you're wrong about them inflating it away. TIPS/ibonds are chump change. You can only buy something like $50k/year, but the .gov currently owes a tad over $8 trillion, with unfunded liabilities from medicare/social security/federal pensions/etc around another $45 trillion.
I'll be the first to admit the $8 trillion debt is a fraud - about $3 trillion of that is intra-gov't debt, so it's only there to keep the sheep happy, but in the real world it would simply be wiped out through a journal entry.
Taxes will not prevent a default since taxation isn't unlimited. There's a theory called the Laffer curve, where the .gov brings in the same amount of revenues from either very high or very low taxes - it's the size of the tax base that changes. Very high taxes will cause the economy to shrink considerably, go underground or offshore.
The new head of the Fed (Bernake or whatever his name is) has decreed that inflation is a good thing and has guaranteed inflation for as long as he's in control.
The United States is an immensely wealthy, diverse and innovative country. We can survive annual inflation of 7-15%/year but it won't be pretty. It may take another 20 years, but by then you'll hear some younger version of "Big Head Ted" (kill your secretary for fun and profit) Kennedy pounding on the podium in Congress demanding a raise in the minimum wage from $27 to $32/hour, since no reasonable person could expect to pay their bills at $27/hour.
Bottom line: The dollar is garbage. It will ultimately fail. I'm pretty confident it won't in the next 5 years. I'll be utterly shocked if it takes more than 15-20. You can keep your dollars and t-bills, I'm buying commodities.