How does the average joe participate?
Nothing new under the sun. During the entire humankind history always criminals were the first to adopt every new technology. Should we stop developing new technologies just because of this fact?
The OP suggests that we should encourage it and find new illegal ways to use bitcoin. I agree. I also agree that shady dealings are the first to use new technology. The porn industry revolutionized delivery of video online. This is a great example of a shady business that could be convinced to deal in bitcoins that would benefit bit coin by increasing demand.