Well the idea is that once Gresham Dollar gets circulating, the rate at which we dip into our USD reserves will be far less than the amount of GD in circulation

Well the idea is that once Gresham Dollar gets circulating, the rate at which we dip into our USD reserves will be far less than the amount of GD in circulation, so we'd be able to sustain more total GD than we have USD in reserves. You can think of each GD as an IOU for a USD that automatically gets paid after a period of time. In that sense, it's like borrowing. But, over time, as people get accustomed to paying using the IOUs, the IOUS become a currency of their own. Similarly, USD used to be an IOU for gold, but there was always far more USD in circulation than there was gold to back it up. Eventually USD progressed passed the point where it needed anything concrete underpinning its value. Money has value because other people value it. Once everyone accepts it, its value is self reinforcing. I'll accept cash as payment from Alice because I know Bob will accept it as payment from me. Eventually, Gresham Dollar will not need to be backed by USD anymore.