Yes. Cryptocurrency will eventually have to bite the bullet and become legit: KYC/AML, deanonymizing bad actors, defunding terrorists, hitting ICO's with laws, exchanges who cooperate with the IRS. It is getting there whether its users want to or not.

Right, and this is the contention: I'm pretty sure when bitcoiners say "censorship resistant", they believe that Bitcoin will be resistant to any future law enforcement. I used to believe this, which is why I'm assuming it's what they believe... Your position that "you can buy drugs today with Bitcoin but probably not in the future" seems much more reasonable, but I'd call this "regulatory arbitrage" (like Uber), not "censorship resistance".