
The problem with "Let's assume" reasoning is that, taken to the extreme
(and you're close), you arrive at "Let's assume this is perfectly OK."

The assumptions you make are big ones. If the system is really secure, then
why does the government have to keep the algorithm secret?  There are plenty
of encryption algorithms that don't depend upon nondisclosure to be secure,
so why in the world use one that does?  There are reasons, of course, but
I certainly can't think of any honest ones.

Next, you assume we can "trust" the escrow houses. But the last time I checked,
EVERY SINGLE BRANCH OF GOVERNMENT has experienced unauthorized disclosure,
corruption, and even fabrication, of supposedly secure data. The govt is
saying "Yeah, but NOW we're serious, so you can trust us."  Bullcrypt. 

And finally, although you didn't state it explicitly, you implicitly assume
that the warrant mechanism in this country is safe and reasonable. The case
in Ventura County of a man shot and killed by officers serving a deliberately
fraudulant warrant tells me that the govt has a long ways to go on this
score.

Remember that all this is to catch the drug dealers, right?  As others
have pointed out, the current proposal will, if deployed, render truly secure
encryption much more expensive and inconvenient than Uncle Sam's brand.
Who will be able to afford, and be sufficiently motivated, to purchase this
expensive, inconvenient higher protection?  Somebody with lots of extra
cash...

The following is more true than ever:

  "When [strong] encryption is outlawed, only outlaws will have [strong]
encryption."
