While I certainly enjoy the comment referring to the 'damning testimony of the malaise that afflicts our language', this is an artefact of natural language change, even if it is heading towards what could be seen pernicious homophony. The fact remains that these are used in separate contexts, and as such these forms would never actually be confused. Equally "would of" mimics the process of adding a vowel between the sounds /d/ and /v/, a vowel whose height and quality borrows from the /ʊ/ in the preceding word. Further, to my great dismay, it allows people to not use apostrophes (perhaps heading towards a place where the the apostrophe means possession, such as in the great confusion between "it's" and "its" ) It is actually quite justifiable, from a literacy point of view. (point've view?)
Confusing language and literacy (or orthographic convention) is easy to do but very problematic. If we are to judge English based on its orthography, we are long since damned.
Still, I agree, and it drives me crazy when I see it.