Actually I think it's dangerous not because of what they could do to me personally as you describe, but what they can do to other more important people that who may be working in my interests. What if some in the government decided they were sick of the actions of groups like Wikileaks, EFF or the ACLU, or up-and-coming politicians who start getting popular with voters because they challenge current government positions or actions. What if what you describe above is done to them? To me that's far scarier.
"The assumptions made in this story are completely stupid."
Be careful throwing that word around...
"First off, you wouldn't get cable to watch a single show."
Well done, you've actually hit on the main point without even realising it. People won't pay just to watch GoT, they'll get it elsewhere instead. An entire section of the market is being ignored and not earning anybody any money. How is that a good business decision? And if it turns out that keeping it exclusive does actually maximise their profit, why the hell are they complaining about it?!
There's nothing misleading here, you're just not understanding the argument. If you want to watch GoT legally, that is what you have to pay. The fact that you get access to other stuff is not relevant, because the discussion is about being able to watch this particular show.
"To suggest Megaupload was primarily used for legal traffic is ludicrous."
Suggesting the VCR was primarily used for legal purposes was also considered ludicrous by the MPAA, and yet looked how that worked out.
It's clear to anyone with half a brain that MU and other cloud storage sites have "substantial non-infringing uses", so I don't understand why you think the end result should be different this time around.
And before any of the usual studio shills jump in, the fact that MU didn't pay for the films to be made does not in any way preclude the studios from offering exactly the same service and potentially making the same income they claim MU made. Unless of course their claims are exaggerated or unfounded...
Not only do I find your claim doubtful (but feel free to dispel my doubts), most people who aren't lawyers would not call what you described 'breaking in', because they know the meaning of the word 'break'.