Maybe in the style of the old tv show "All in the Family" where an openly racist character often said racist things in a way that highlighted the foolishness of racism? Just guessing.
Regarding the first point, how would that help? The password has to be stored in the clear on the server. If an adversary got control of the box, then the adversary would get the password. And secondly, how would you search a database full of encrypted data? Homomorphic encryption isn't ready for prime time as I understand it.