It works in your theoretical scenario unless you also take away word of mouth, international communication, and international travel. I don't see China banning any of those any time soon.
Tell that to the RIAA and MPAA, and every politician wanting more surveillance and censorship. The reality is that law, and money, and force currently, and always will, trump a geek at a keyboard.
Further, please consider that you don't have to kill a thing to control it. Even when something is technically possible, and arguably inevitable, it can still be neutered and effectively subdued. It's all fine and well to say things that suggest the human spirit will always triumph - that's optimism - but the human body can still be held in chains. A technical solution that is only accessible to a tiny set of people, under the right theoretical conditions, does not make freedom a solved problem.
