This isn't new, and there isn't anything to stop your ISP from siphoning your emails in transit. Many companies are required to keep all email communications stored for an amount of time and have systems in place that capture and store for later discovery. Even deleting the message doesn't mean that it's really gone. The cold hard fact is that while your data is in transit on a system not owned by you, you don't own it. It's like your trash on the curb, the sanitation workers can (and probably do) go through it if it looks interesting enough. The best you can do is make it look boring.
I have a t-shirt (that I got from thinkgeek) that reads "I read your email" and it's absolutely true, in more than one respect. As an administrator for an ISP, the mail server, all accounts and subsequently all data stored in those accounts is in within my sphere of influence. I can legally read any message present on the server. Included in those numbers are mail accounts for several city and county governments as well as many businesses that host their domains on our server. As a forensic examiner, I also am given access to much information and many email messages, so I do indeed read your email.
At this point in the explanation of my t-shirt, is where I explain my personal ethics.
It is because I have no faith in the ethical boundaries of others that I have a private server for my personal email.
One note about one of the potential options listed above. Storing mail in an encrypted folder would be a great idea if the mail server didn't have to read and write to the mailbox. If the server doesn't have the key, then the incoming messages cannot be encrypted. You could always use PGP though.
