Your point about Digg is wrong, I think. It wasn't just the infamous encryption key. Digg was already known for inconsistent and at times unjustified moderation and many such stories went unnoticed for that reason - they were quickly removed. The HD-DVD was just a tipping point - for many perhaps only subconsciously.
And this explains my point: Digg has never been honest and that eventually paid off.
You have to do what your users want, simple as that. If what your users really want is openness and honesty that's what you give them. Digg's users want to be able decrypt dvds (even if in the abstract for most of them). They've had many accusations of lack of transparency in the past that went nowhere.