How can determine the fundamental theoretical value of the Bitcoin based on steady state daily velocity (BTCDD)? The VISA network (VisaNet) supports 4.4 Trillion dollars of commerce per year (2009). If we assume (somewhat arbitrarily), that the Bitcoin Days Destroyed metric approaches 50% (half of all coins are used every day, on average, to facilitate transactions),
then the value of the Bitcoin required to support 10% of the transactional volume in the VISA network (once all coins are minted) is $4.4T * 10% = $440B / 365 days/year / (21M BTC * 50%) = $114.80.

Does this approach seem valid? 50% BTCDD is arbitrary. 10% of the VISA network, is arbitrary but seems like a reasonable goal. What needs to be changed to improve this estimate, and what would a better way if any to compute the imputed value of the BTC based on its use as a transactional currency, rather than a speculative store of value?
"Bitcoin days destroyed" seems like a bogus metric. Transactions in the block chain do not always represent an actual economic trade. Wallets routinely resign the remainder of a coin to a new private key and it's very hard to determine what is the transaction and what is the change. You could spend 0.5 BTC from a 50 BTC block mined 10 days ago, and resign 49.5 BTC to yourself - you have "destroyed" 500 bitcoin days as far as the metric is concerned.

You don't have to care about the proportion of currency circulating, just the average velocity. Us dollar M1 velocity is in the 8 - 10 range. That means that on average a dollar changes hands every 1-1.5 months. If we assume a similar dynamic for say 10 million bitcoins (2 years from now?), we get about $4400/BTC for 10% of your quoted Visa volume.

But 10% of that is very, very much. It includes 1500bln in cash/ATM and 1700bln in credit purchases. The online commerce part of that than Bitcoin could target is maybe 200bln dollars and 10% of that brings the price of one bitcoin to 200$. 

And all this assuming the deflation does not choke the velocity - which it will, bringing the actual volume down and with it the incentive for businesses to invest in bitcoin support.