Well, it kind of is deception. I think we've reached a point where there's not much point in not being open. I'm particularly thinking of the anonymity issue, more than the colored coin issue. The latter is somehow neither here or there, as that's a separate kind of architecture (issuer). If we continue to propagate the notion, as was done in the Senate hearings, that "bitcoin is traceable and so AML and tax will be fine", it will be seen as deception by all participants in the discussion, when it's later found that practical traceability is rapidly lost due to coinjoin/stealth/coinswap/mixers etc etc.
If they want to implement Fedcoin or USDcoin within a OT structure, a colored coin structure, a ripple structure or whatever - to me that's an orthogonal issue to Bitcoin. That's just about more elegant ways of centrally controlling an asset (at best - at worst it's a waste of time).
As for the government being one monolithic entity, don't worry, I'm under no such illusion. However those driving policy will be informed (after all they are supposed be information and security agencies) if it becomes clear that there is an unexplained threat from cryptocurrencies.

I think ultimately our disagreement on this point will be very much moot since Gavin does not see the situation at all as we do (as you put it "fiat is doomed").