Having used the London bikes when I visited, they really aren't so bad. Not as good as the bike I have at home, but they do everything you'd want out of a beater bike. No one is racing them or anything, just going from one place to another.

We race them. But hey, each to his own.

There are quite a few cycle hire alleycats around the world. The London ones are fun.

One of my friends rode the Dunwich Dynamo on a cycle hire bike. 200km overnight on a bike that you couldn't service or fix a puncture on... pretty brave.

You are misunderstanding. The bikes are not at all unpleasant to ride (although they are quite heavy, they also feel very sturdy and resilient to all road conditions). They would however be very unpleasant to steal and own, because they are too different from normal bikes. It would be a pain in the ass to park them in the city or service them at home and everyone would recognise it as an out of place rental bike.

By the way, stashing bikes behind locked doors is actually what the "OV-fiets" plan in The Netherlands is doing (they are more like lockers, really: http://3.bp.blogspot.com/-PeUfIZbrzY4/Ti8hHZCsLyI/AAAAAAAAAE...), and it works quite well. As a bonus, you can also rent those lockers for your own bike.

Docking stations in buildings, you mean like the Brompton Dock?

http://www.bromptondock.co.uk/

Then you get one of the best folding bikes, perfectly good for general use too.

They have plans for long-term hires too so you can use a bike daily and guarantee it is there for your commute. In the UK these Brompton Docks are mostly located at rail stations so that you have a bike waiting for you at the end.

Have you tried them? They're quite useable. The sturdiness is great on Montreal's pothole strewn roads.