The problem is that the excuse given is simply the most bald faced lie in existence.
Nobody copies via analog. EVER!
The way people copy is by capturing via digital connections. HDMI will have the HDCP stripped if necessary and feeds directly to PCs, or PCs with built in tuners.
Discs are just dropped into PCs and copied 1:1 via readily available software.
Is the FCC really a part of this though? This is all about Blu-ray and may just be part of the format standard, but that particular article doesn't talk about the FCC.
The one thing I can say is that since my entire house still is setup on an analog system which would cost about $10,000 to upgrade to HDMI, if I run into discs that won't give me 1080i over component, I'm more likely to remove that encryption than I am to upgrade my entire system due to their stupidity. Or, in simpler terms, their own action will be the direct result of more demand for product which converts from HDMI to component, or allows for discs to be easily hacked and played back directly from 'unauthorized' players.
Shooting yourself in the foot? Priceless.