Here's my question:  What choice do we have?

If the government decides they want businesses to report what Bitcoin addresses they are using (say, on a new virtual currencies tax form), and who has sent them money and who they have sent money to, it will effectively de-anonymize the whole network.  Businesses couldn't operate legitimately without compliance, and businesses who complied would effectively rat out all of those who didn't.

If the government decides to implement it, it wouldn't be hard to get enough businesses onboard to make it eventually fully effective.

I agree this would effectively kill Bitcoin - no one wants every financial transaction they make to be aired to the public.  Basically, the government is in control of Bitcoin's future.