HSMM-MESH is cool, really really cool, and people should definitely go check it out, but to quote the website you've linked:

  it is NOT a replacement for your home internet connection
    being an Amateur Radio network, it can only carry traffic that is allowed under FCC Part 97 rules
    several types of internet traffic violate these rules
  also, it is NOT a replacement for your home internet connection
  finally, it is N O T a replacement for your home internet connection
  and by the way, it most certainly CANNOT be used in any way with your business network

I understand much of the traffic you'd usually send over the internet is not permissible over broadband hamnet.

Anything of a commercial nature, yes. You can still discuss, talk, etc. about anything else. If you're going to use a mode of communication so drastically different and with completely different content rules, most of your traffic will necessarily fall in those rules. Just don't expect to put up a blog with AdWords about how to run a startup. :-p

Wouldn't any end-to-end encrypted traffic, regardless of the commercial/non-commercial nature, be illegal?

Yes, the content of any message must be clear to any external observer.