Someone would still have to store it. It's not like some part of the blockchain could be omitted by everybody.
Sure. And that someone could be China, Iran, North Korea, Iraq, Equador, Chile, Russia, India, Seycheles, or if none of those are willing to, pretty much anyone, anywhere, on a Tor node. Or an I2P node. Or any other anonymizing node.
They could argue it's not the accounting ledger that's illegal but the excess information that is already. And because there are no methods available to prevent somebody to store more illegal information in it it can be declared illegal to posses the block chain.
You have to keep in mind to follow how a bureaucrat would think in case he is supposed to "do something about that".
And that's why drugs are not available anywhere, and CP is no longer on the internet. Sure, it would be a problem for the business that's in a country that bans bitcoin, but it won't be a problem for any businesses outside of that. USA banned online gambling. Doesn't mean that business is dead.
Of course you're right, but still such a situation wouldn't be something to look forward to.