I'm not sure what your point is. You're essentially saying you're screwed with the blockchain, but everything you started implies you're screwed without the blockchain:
central authority could take my house and disregard the blockchain
Sure, and they can do that now. The only thing stopping your city from taking your house is the court system and police enforcement. In a game, there are even fewer protections, so the game devs can take your digital assets if it's inconvenient. I guess you could sue them in civil court, but they're also in control of the EULA for the game. We've seen cases where games ban players, which essentially takes away the license they bought for the game.
With blockchain, you could externalize all of those transactions. If the main servers block you, you could join another server that doesn't recognize the ban. The less control the game companies have over transactions, the more transparent those types of decisions become.
However, it needs to be built properly to actually take advantage of the benefits of blockchain. Everything I've seen has simply been a money grab because there's little incentive to do it properly.
