A Freudian's Dilemma: Those Pesky DRMs and IDs

Here's a concept that does not offend me: pay a fair price for a copyrighted work, freely and effortlessly use what you paid for. If I'm reading Eric Norlin correctly (here, here -- great observations about collisions and mediation -- and here), he thinks Palladium, coupled with a foolproof, secure and sufficiently privacy conscious identity system (a pipe dream? I hope to be able to make more educated guesses about that soon), might accomplish this. Doc has concerns but does not think Eric's necessarily wrong. Microsoft itself says, "'Palladium'-enabled DRM systems can overcome the overly restrictive and sometimes consumer-unfriendly mechanisms that are creeping into closed, captive devices (such as some consumer electronic devices and cell phones), by providing a broad, interoperable and open platform for content. Unlike closed, captive platforms, 'Palladium' allows any provider or even individual to build a trustworthy interoperable mechanism that is not in the exclusive control of a single entity." (Palladium Technical Initiative FAQ). There will be lots more on this (and with any luck less esoteric phraseology) at Digital ID World.

I understand and appreciate Ernie's storm trooper analogy, but from what I can tell the Empire already has Stricken Back, and the troopers already are here. I don't know enough (correction: jack) about the technology to judge whether Palladium and digital identity stand poised to actually tame them. I don't know if commercial enterprises and the market (see Dr. Weinberger's thoughts) can make this all work as it should. (Note, though, that in addition to the sign of Microsoft cluefulness Doc mentions -- he's being flown to speak there after Digital ID World -- there's another recent development worth mentioning: Microsoft appears to have put out Service Release 1 to Office X for the Mac in part in response to pressure from frustrated users who wanted to run more than one copy on a home network. See Microsoft Security Bulletin MS02-002.) But I'm wondering: what sensible alternatives are left? I'm leery of what legislation might "accomplish," for example.