It gets worse people:
http://www.theregister.co.uk/2009/01/05/police_remote_snoop/
Denial tends to mean six months later...
On the other hand they may well have a few people able to go toe to toe with me but I can assure you it will take a lot of effort.
My only problem is as part of rom hacking I have loads of random (literally) data on my drive that looks exactly like encrypted data. I do also have some properly encrypted data using an unbreakable encryption (one time pad with key length larger than the file: see old school spy method of using a given edition of a book) which is bound to cause all sorts of fun.
Large drives on the ISP: my otherwise slow connection (700kbyte/sec has been going at full pelt for several days now and usually does this for about 15 days a month in total), add in friends (loads use VPN now) and I seriously doubt any government department or anyone for that matter can pull off a days storage let alone anything longer term.
I imagine the same experience will be repeated at a border crossing some point in the near future (given they can apparently legally search a laptop).
Erase hard drive: I agree it is hard but not impossible as you seem to imply. Also self destructing drives are not exactly hard to make.
Also for anything especially dodgy I have a linux live CD which will never touch the hard drive, good luck intercepting that.
On the flip side there are many weakly encrypted networks in every populated area I have ever been too, I have no objection to rolling two towns over and doing stuff if needs be. Given that they seem to have no understanding at the best of times it would not be hard to do things via another network (the only thing that really matters then is the mac address which is trivial to change).
So in conclusion BS law that will not stop anyone fun.