Oh wow, even better than I thought. I have made an edit to reflect this. Thank you for clarifying the system, learning every day! =)

In that case, what happens to the USD converted into bitUSD when poored into the system via, for example, CCDEK? If not held as collateral, where is it kept?

Being able to buy straight into the BitShare market with USD without having to go through a medium like BTC is something I am hugely thankful for as someone with limited exchange experience. It does a lot to simplify the crypto buy-in process for a new investor.