Dropbox works brilliantly for sharing/syncing non-private files, but I don't think it makes sense to try to patch on something to make it work for truly private files. In my experience, the added security of encryption always comes with some inconvenience, but TrueCrypt volumes sound really inconvenient (like dealing with conflicts if the volume was mounted on multiple computers at the same time).

I'd rather lose the convenience of the web interface, etc. and have locally encrypted files that are only accessible to me.

What about adding encryption on top of a tool like lipsync (https://github.com/philcryer/lipsync) as an alternative to Dropbox for private files?