Greham's law only applies where people are forced to treat good and bad money as equivalent. For example, if people are forced to treat coins of the same denomination as equivalent, regardless of how much gold the contain, you'll spend those that contain less gold and keep those that contain more gold.

Yes, that's right. Note that it also applies to fiat currencies. For example, at various times in recent years many Venezuelans would try to hoard USD (the good money), driving it out of circulation, and spend as much as possible in the latest version of the Bolivar -- until the Bolivar failed. Once the Bolivar failed, everyone would stop accepting it. Venezuela has created several versions of the Bolivar in recent years that have subsequently failed.

Interesting.

I was recently reading an essay from Hayek that explained why a better currency tends to drive out a bad one. I might need a refresher, though this seems to be one of those things that are true depending on how you look at it.