There will come a time where a company demands users install software on their machines and send every single key tap, mouse click, and any other item they can get access to as individualized ad data.

It's already happening. It's called "Cloud computing".

You're correct that various "wardrobe malfunctions" are in high demand, however may I point out that:
-there's a specific Internet sector servicing this at a higher resolution and extent
-Super Bowl ads have little to do with Google (other than surfacing some time later on youtube)

Can you elaborate on society's demand for ads?

Then you'll see only the same old built-in ads forever.

Why do these companies repeatedly store only *some* of my personal information encrypted?

Because cowboy attitude. We just had here the story on the EU law about deleting older links to personal data from search engines. Where most US contributors insisted that this data is "facts" and it would be "free speech" to disseminate it as businesses see fit. Combine this with EULA practices where businesses (many in monopoly position) will not service you unless you agree that they collect your personal data and share it freely with various "partners". When such practice is questioned they always justify it through "it's good for the economy". Case closed. Unless we take the time to question what exactly "economy" is. But we never do.

Cinavia. Except its effect is rather bizarre. While it doesn't prevent you from "making copies", it prevents you from playing audio of said copies on a PS3 and selected Blu-Ray players. Guess it didn't help increase Blu-Ray disk sales, but it surely helped decrease PS3 and Blu-Ray player sales.

Looks like the difference between censorship of ideas or scientific theories/facts and practicing restraint in publishing personal data is too subtle for you.