For the most part, I think all the details should normally be hidden from users-- I think "Select Transaction Type" is much too geeky.
Thinking out loud, and starting with what I think will be a very common use case: buyer and seller and somebody to resolve disputes that arise (2-of-3 escrow).
Are you imagining all three are using a bitcoin client? In my head, one might be using bitcoin-qt, another a web-based wallet service, and the dispute resolution would be done by a company with a website. I don't think "we're all running bitcoin on our computers" will be the common case.
So here's how I see it working (my ClearCoin experience may be biasing me):
Buyer and Seller sign up with the escrow service. During signup, they each give the escrow service a public key. How?
-- Clunky way: they poke a "Advanced.... New Public Key" button and then copy&paste a long string of hex
-- Better way: they poke a link on the escrow status page that does some magic
(maybe there's a bitcoin:sendnewpublickey?destination=https://www.clearcoin.com/newkey/user1234 URI type that can be made to Do the Right Thing)
Buyer or Seller then creates an escrow at the escrow service's website.
-- Escrow service creates or assigns a keypair for their part of the 2-of-3
-- Escrow service creates a newfangled bitcoin address using the 3 public keys.
Buyer sends bitcoins to the newfangled bitcoin address (by clicking on it at the escrow service's page-- it could be a bitcoin:... link)
Escrow service's wallet sees the payment to the newfangled bitcoin address, updates the status page.
Buyer tells seller they paid. Seller checks the escrow status page, clicks on a "send me the money" link and ships the product to the buyer.
What does the "send me the money" link do? It needs to get a signature from the seller for a transaction that spends from the 2-of-3 transaction and sends to the seller's wallet. Another bitcoin: URI that does magical stuff? (bitcoin:signtransaction?tx=...hex...&destination=https://www.clearcoin.com/... ) Or some other clunky copying-and-pasting of long hex strings?
Days later: Buyer gets the product and is happy. They visit the escrow status page and click on a "send THEM the money" link, which does more magical stuff. Or more clunky copying-and-pasting of hex strings. In any case, the escrow service gets the second signature and sends the transaction to the bitcoin network, and the coins show up in the seller's wallet.
Couple of notes:
I don't see the newfangled-bitcoin-address being part of the
Need to think about what happens if the escrow service suddenly disappears... they can't steal any coins, but if neither buyer nor seller knows the public key the escrow service is using then they can't complete the transaction by themselves. Perhaps the bitcoin: URI that the buyer uses to fund the transaction should include all the public keys and should be added to the buyer's wallet...
All of this would be much nicer if there was a more user-friendly, security-friendly representation of bitcoin addresses / public keys.