Yes, as the borrower, you SHOULD be powerless to withdraw their funds. The lender "owns" your Bitcoin, so should retain control of the 2 of 3 keys until you pay off your loan.

I agree. I just don't see how that's a defense in people's minds. It isn't any better than just giving someone total control of your Bitcoin. You're still doing that even if you have one key. You've effectively converted yourself to paper Bitcoin when you do that.