In the specific case of the project known as 'TheDAO', the terms of service does indeed waive all legal rights and says that whatever the computer program says supersedes all human-world stuff.
I may have missed it, but that is not at all what the link you posted says. It has a waiver of liability against 3rd parties (basically the DAO operation). It does not say that you cannot have liability between to parties subject to a contract, or even seem to mention anything about dispute resolution.
Also, I would like to point out that you CANNOT have a contract that requires an illegal act. For instance, you cannot create a contract that says "Person A waives all legal recourse against Person B if Person B murders them." The act of murder is still illegal even if both parties agree to it.
Finally, the TOS for DAO is not the contract, it is merely the TOS for using the service. So the individual contracts between two people are going to override that.
You're still conflating the term "smart contract" and the idea of a legal contract.
That's like conflating "observer" in physics with a human staring at you or hearing someone talking about a Daemon on their server and talking as if it's a red skinned monster from hell perched on the server.
Imagine someone says
"This is a river, if you throw your money in it will end up somewhere, we call the currents a 'water contract', the only difference to a normal river is that we've got the paperwork signed such that this doesn't count as li...
Many people are probably aware of the hack at DAO, using a bug in their smart contract system to steal millions of dollars worth of the crypto currency Ethereum.
There's various arguments as to whether this theft was technically allowed or not, and what should be done about it, and so on. Many people are arguing that the code is the contract, and that therefore no-one should be allowed to interfere with it - DAO just made a coding mistake, and are now being (deservedly?) punished for it.
That got me wondering whether its ever possible to make a smart contract without a full AI of some sort. For instance, if the contract is triggered by the delivery of physical goods - how can you define what the goods are, what constitutes delivery, what constitutes possession of them, and so on. You could have a human confirm delivery - but that's precisely the kind of judgement call you want to avoid. You could have an automated delivery confirmation system - but what happens if someone hacks or triggers that? You could connect it automatically with scanning headlines of media reports, but again, this is relying on aggregated human judgement, which could be hacked or influenced.
Digital goods seem more secure, as you can automate confirmation of delivery/services rendered, and so on. But, again, this leaves the confirmation process open to hacking. Which would be illegal, if you're going to profit from the hack. Hum...
This seems the most promising avenue for smart contracts that doesn't involve full AI: clear out the bugs in the code, then ground the confirmation procedure in such a way that it can only be hacked in a way that's already illegal. Sort of use the standard legal system as a backstop, fixing the basic assumptions, and then setting up the smart contracts on top of them (which is not the same as using the standard legal system within the contract).