Email is different from physical home security and to compare the two I think is a bit of a red haring.
That DEA case referenced where Hushmail hacked their user to get the password to decrypt their private key and stored messages shows a fundamental weakness in their system's design. I would never leave my private key on someone's server, even if it's encrypted. It's just too tempting for a government agent to strong-arm the provider into doing exactly what hushmail did. Court order? Sure, they complied with the law but here we're talking about the 'ability' of a third-party to decrypt messages. I have one key, you have another. I should be able to send to you without anyone else being able to decrypt it.
Luckily, there are other systems out there like GPG which people can feel safer with. There are even some companies trying to automate everything like TrulyMail so non-technical users can also get things up and running.
Is there a perfect solution? Not yet, but I see things getting better with time.