It might well be illegal under crazy laws, but not the one you link to: Beneath the vitriol a very important point was made: The prosecution has to prove beyond reasonable doubt that you have the key and that you're refusing to hand it over. The presence of software like this, traces of your participation in such a network is reasonable doubt. Even with this proven, refusing to decrypt is what they get you for, not what they think you've got encrypted.
[1] http://news.ycombinator.com/item?id=4234614