What makes you think it would be much cheaper? I think it might have to be more expensive. The anonymity aspects of bitcoin could result in more fraudsters getting away with fraud.
I'm not saying it would; I'm saying it potentially could.
But the CC system also provides anonymity, since most cards used for fraud are stolen anyway, so the fact they're tied to a real person is irrelevant.
Bitcoin, on the other hand, doesn't suffer from the same problem as CC - that the payment info must be shared with every single merchant - so it's potentially must harder to steal; Target wouldn't have a copy of your bitcoin wallet just because you bought something from them, for example.
Read above. We are discussing a hypothetical system that provides a PayPal-like guarantees layer on top of bitcoin. As you point out, bitcoin transactions are always irreversible. That's what could make it more expensive in my view. The service would always be reimbursing buyers involved in failed transactions at its own expense.
