Given how many are expressing their concerns about privacy and security in the cloud, here is an application that can fix this:

Browser plug-in that encrypts Google Docs data before posting it to Google and then decrypts it when users read their Docs. You just need to find this in the plug-in - OnBeforePostDocToGoogle(data), OnAfterReadDataFromGoogle(data).

I am not into encrypting and I am also not into browser plugins, and I am working on my own thing here (apart from full time job), and I am not going to do this. But the right person with the right knowledge might build this in one afternoon (and possibly users will be willing to pay for it)