So after a certain number of blocks either key could take the funds but if they breach the contract you can cryptographically prove it?

I actually quite like it. It beats the 2 of 3 multisig used right now for most decentralised loans which requires unbalanced trust. The third key holder is in most cases incentivised to align with the service provider/coordinator.

My 2 concerns would be does it work & is it reasonably easy to verify what is occurring & reclaim your sats?