In my opinion we have seen quiete a positive development on FB in regards to the control and usability of the privacy options recenttly, most likely triggered through the appearence of Google+.

Most, if not all the people I know, have long restricted their profile to a minimum visibility level for non-fiends and non real friends.

At the moment I do not see the privacy problem as big as it used to be 12 months ago.

A lot of people in my network had restricted their profiles as well. However, due to some change (I guess around two weeks ago), most of those profiles are somewhat open again, and I can access information that was blocked before. I really dislike having to lock down my profile again everytime Facebook changes this stuff.

You're right that sucks. But if you think about it it's probably more of a technical issue than evil policy, just imagine the permission graph for visiting one of your friend's profiles -- FB would have to do a reverse lookup of all of you friend's friends and filter ones with closed photo sharing (or what if you are a friend common to both?). Further, scaling that out to 750M people is non-trivial.

Anyways, I'm not excusing their policy, but I expect they'll fix it whenever it is technically possible to do so.

No, it's not significantly more difficult than the existing case.

You have one permissions set - my permissions on my photos. And another permissions set - my friends' visibility sets on their tagging. The display set is the interaction between these two sets, which any database developer should be trivially able to calculate.

I don't for one minute dispute that the scaling issues for calculating these interactions for 750m users are significant, but the core task definitely isn't.