Brain wallet seeds are unencrypted information, and so are the private keys you generate from them, so your first point does not apply.
No, password to your truecrypt container is also unencrypted information, and that is what the law require you to give up.
Government doesn't need to decrypt/steal your bitcoins in order to stop you from using them. They just take your computers and little slips of paper, now your bitcoins are "gone".
I think you two are struggling with the brainwallet concept. No truecrypt container, no computer, no paper. It's a mnemonic for seeding a valid private key that you remember using your
brain They private key is the encrypted information they want, you have the key, give it up or go to jail. Even if the law won't allow this atm, it's a small technical change and it's all the same.