Being held in contempt is a very light sentence. Moreover, when a defendant refuses to comply, consequences can only be coercive, not punitive. That means that, e.g. imprisonment is limited, because if 1 year in prison isn't going to coerce you, neither will 10 years.
The great issue here is the total unbreakability of crypto when compared to e.g. a safe. Before this, all we had was human memory which is very limited.
If your argument is that they're willing to face the consequences in order to perpetrate their greater crime, then (respectfully) you've missed two crucial points:
1. US legal tradition wholeheartedly rejects the goal of absolute security. Better to suffer a few terrorist attacks than live in a surveillance state (yes, yes ... I know... not the point...)
2. Deterrence, in general, doesn't work against self-sacrificing adversaries. Even if crypto were outlawed, terrorists would still use end-to-end crypto, and refuse to comply with a court order to decrypt.