You said that before the wallet is encrypted, the master key is just a random 32 bit number.
If the wallet has no password it also has no master_key. The master_key is not randomly generated until the user initially encrypts the wallet. The decrypted master_key is never stored on disk.
After you encrypt it with a password, the password decrypts it, then is wiped.
This sentence is unclear.
To initially encrypt the master_key, the client asks the user for a new password. The password_derived_key is created from the passphrase. The master_key is encrypted with the password_derived_key. The password & password_derived_key is removed from memory.
To "unlock" the wallet the client prompts the user for the password. The password_derived_key is created from the passphrase. The encrypted_master_key is decrypted with the password_derived_key. The master_key is stored in memory. The password & password_derived_key is removed from memory.
The "lock" the wallet, the client deletes the master_key from memory.
I'm assuming that it's the same as the unencrypted private key... finding the original unencrypted master key wouldn't do any good, you'd still need to brute force it, correct? Which is no easier than just brute forcing the wallet.
I am not sure I understand the question. If you find the (decrypted) master_key you can use it to decrypt the individual private keys. No brute force is required, you have the decryption key.
The reason for not encrypting the individual_private_key with the password_derived_key is if the user changes the password then you would need to decrypt and re-encrypt every single private_key. By using a random "master_key" if the user changes the password you just need to decrypt and re-encrypt the master_key.
Just curious at this point. What got us into bitcoin originally (ok, me really) is the cryptography used. It's fascinating to me. You can't copy BTC or fake a transaction (well, easily, 51% and all that) or cheat the system. It's quite beautiful.
Cryptography done right is pretty amazing. With Bitcoin we are only at the beginning.