And the logs are stored encrypted offline. They move over a one-way link from main server somewhere else in case of a compromise. They're never shared except with law enforcement with a warrant per privacy policy and EULA.

Inspires more confidence if they're kept temporarily but heavily protected.

That won't sufficiently discourage folks who want to do potentially-illegal stuff from doing so - it will let you defend yourself in case of a legal incident, but the cost (in time, money, and happiness) of having to deal with a legal incident at all is pretty significant. It seems better to me to try to limit your users to people you believe are unlikely to trigger a legal incident, unless you're at the point where you can hire someone to deal with it for you.