They're just plain underestimating it, and later they'll be fighting it like Microsoft fights open source--sneakily and underhandedly, provided we don't give them the ammunition to do it effectively in the court of public opinion. Don't use bitcoin to trade in illegal arms, fund terrorism, and advertise tax evasion, and we'll all do just fine.
... I think you forget paedophilia and drugs. Yout analogy with open-source arguments haven't considered that the current monetary system is broken and thrashing about in its death throes and destroying large parts of civilised society as it goes. Puts a different slant on the whole ... "we can work with the current power-brokers" line of thinking I'd say. If they resist bitcoin as fervently as they have resisted the move back towards gold and silver there maybe more than just a few dirty tricks.
The subject title for this thread should have been "Government versus Bitcoin".