So you're entire argument is that one should trust unencrypted public airspace more than (or as much as) one should trust a single router?
Mine entire argument is that one should not trust the encryption betwixt wireless ethernet card and access point to protect anything at all. Do not trust it to keep people off of your wireless network, and do not trust it to protect your email password, and do not trust it to protect your browsing habits. You may reasonably trust a combination of firewall and IPSEC provided you keep up with advisories and updates, and even that is plenty debatable. How do you define "trust"? You trust the tool to do what it is capable of doing. Not only have wireless encryption schemes been defeated in the past, suggesting that the same might happen again, but a router outside of your control is the very definition of an "untrusted" device.
Less exposure is less exposure, and that's good.
OK, these days there's little reason not to use encryption, unless you have legacy devices which don't support meaningful encryption. But then, there's also no reason to believe that the encryption provided by the AP will protect your data. I assume that it is a minor inconvenience to an attacker at best, and I am never disappointed. If I care about security, then I use some kind of VPN technology, like IPSEC tunneling — probably the best scheme for the typical user, if they can manage the configuration, because of the broad compatibility. To wit, virtually everything works fine through IPSEC provided that there is no NAT involved, and many software packages which once did not work have been deliberately modified to permit IPSEC NAT traversal. And there is a fairly high level of compatibility between implementations, to the point that you can reasonably expect to get IPSEC working whether your nodes are running Linux or Windows or HP-SUX or what have you. Configuration, however, may be hairy and scary... Which is why stuff like openvpn even exists, AFAICT.
It ain't perfect, but nothing is.
I don't disagree, but if your goal is to protect your login credentials from unknown third parties, then wireless encryption on an open AP is essentially useless. I have no way whatsoever to know that the AP itself isn't some kind of trap, and I have an equal lack of opportunity to determine whether the AP has been compromised without compromising it myself, checking its software version, obtaining a dump of the software, and comparing it to a reference download. As such, trusting any public access point is something that I must not do. If your goal is to protect your data, then you must do (or indeed, not do) the same.