You're definitely right that existing systems already implement 99% of the functionality that one would ever want out of these assets, but I do want to note that the notion of "code is law" is pretty optional when you're talking about these Government-backed assets. Code is not law. Law is law.

If an asset is transferred on a blockchain, it's only presumptively authorised, not conclusively. Just like a paper deed bearing what looks like your signature next to a notary stamp is also only presumptively valid. You can go to court to overturn that presumption. By similar logic, a "master key" can exist to allow transfer of the assets by court order. And because the blockchain is still just a human concept which has only the value humans assign to it, if all else fails, a court or government can just declare a problematic deed NFT to be invalid and re-issue it or go back to paper.