Ian:
Great letter! I agree that the "stop campaigning for bitcoin's destruction" message might backfire, and the message should be "we're an innocent bystander here." You might even offer to help law enforcement better understand bitcoin so they can develop tools and techniques to catch criminals who use it.
I've been thinking of how to react to this story, and am tempted to appeal to people's greed/fear with a message of "your country may miss out on a huge new opportunity and be left behind if you try to stamp out innovative new technologies like bitcoin."
If law enforcement can develop tools and techniques to catch criminals using bitcoin they will have effectively proved that bitcoin's implementation does not provide adequate anonymity or security. Whether or not you agree with what certain people do with bitcoin, it's purpose is to prevent ANY central authority from having control over the financial system. This includes governments. If a government has a way to prevent, manipulate, or track transactions at will, then bitcoin will have no purpose whatsoever.
However, if law enforcement attempts to develop such tools and techniques to track down "criminals" and do not succeed, it will only reinforce trust in the bitcoin implementation.