What purpose does XRP serve in the ripple protocol? I have been reading over this document that Ripple Labs put out. The document says that:


  XRP is there to provide two key functions: to prevent abuse of the system and to act as a bridge currency for market makers providing liquidity within the network. Thus, users can hold balances in one currency and transact in another currency without converting to XRPs in the process.


And later


  In theory, users of the Ripple Network could exchange anything of value. 


Bitcoin already has spam prevention, and a much larger trading volume than Ripple, though. It's not clear to me why everything that Ripple Labs is doing couldn't have just been done with BTC. 

I really like what most of what Ripple is doing (trying to integrate with the existing financial system, for example), it's just hard to trust it knowing that the developers own so much XRP, combined with believing that it could have just been done with BTC. So, essentially, I'm looking to be convinced that the creation of their own token was, in fact, necessary.

Is it just to fund Ripple Labs? I don't mean that in a negative way, I actually think that funding the development of decentralized applications is a difficult problem. Decentralization inherently allows users to participate in the system without consent from an authority, and without needing to pay any single entity. But then what incentive does that developing entity have to create the system? I think this is why so many decentralized projects are opensourced projects, rather than proprietary solutions. And the ones that are proprietary solutions (like Ripple), usually create their own token.
It's not clear how you're imagining doing what Ripple does with Bitcoins, so it's hard to say whether you're correct or not.

If you mean with the Bitcoins still being transferred on the blockchain and being used directly to pay transaction fees for Ripple transactions, that wouldn't work. Bitcoin transactions take time to confirm, and slowing Ripple down to Bitcoin's speed wouldn't make sense.

If you mean with the Bitcoins being virtualized somehow onto Ripple's ledger, it's hard to see how you can do that reliably without a central authority. Also, what do you do with the Bitcoins that pay transaction fees? Destroy them?

You haven't really set out your proposed alternative in much detail. It's possible that you do have some good way to do it. But I don't know of one.

One of the main points of Ripple is to solve the double spend problem without relying on proof of work and without being vulnerable to 51% attacks that have no clear solution. Building on top of Bitcoin would make a system that was at best no stronger.

There are significant benefits to having a native currency on the same ledger.