The medium verses transformation is a really interesting argument. I wonder how the law will see it when that day comes.

I have a feeling that the transformation argument may fall pray to the "color of bits" problem but perhaps not. I think it may even come down the choice of algorithm - if I use a publicly available encryption algorithm then it might be considered a medium, whereas if I invent my own language maybe it won't.

As for the forgotten key, that's another argument. There is probably a burden of proof somewhere in there (and probably more on the side of the prosecution). If, for example, the police knew you accessed the contents of the hard drive last week, it would be pretty difficult to claim you forgot your key.