The reason everyone thinks Ron Paul is a Kook is because he is the only one willing to admit the Truth.
Ron Paul and people like him are about the only sane ones left.
Now, as to the more serious issue (Paul simply isn't serious): what happens if we default? Really, not a lot. Who do we default to? 1) U.S. bondholders. But a default doesn't mean you don't pay people ANYTHING, it can mean you pay them only some of what they are owed. 2) Foreigners. The Chinese, because of keeping their currency fictitiously low, have in essence increased our debt. This would partially restore real values in their case. In the case of the Euros, it would shift a transfer of wealth from Euro bondholders to American taxpayers---in essence, a reverse of the Marshall Plan . . . or a repayment of it.
What default really does is to remove one of the major sources of trust in the USA that other nations, no matter how much they hate us, have always had: that we are financially solvent. In essence, this would be a financial "nationalization" of foreign wealth (and some American wealth too). It would undermine Hamilton's great objective of making the U.S. always credit worthy.
Is it worth it if it puts us on a balanced budget and the road to fiscal responsibility? Perhaps.