Bruce Schneier has it right with respect to the recent kerfuffle about unmanned drone video encryption. See: http://www.schneier.com/blog/archives/2009/12/intercepting_pr.html
UPDATE: there is always room for debate. Ben Adida agrees that key management is difficult, but suggests that syndicating the video stream may offer an alternative approach. See: http://benlog.com/articles/2009/12/27/sometimes-its-not-counter-intuitive/
My opinion: Designing real-world security solutions is hard - to further the debate we would need to dive deeply into the use cases and understand the detailed requirements and flows - then analyze the existing solution in light of current technology and practices. I'll bet there are some details about requirements and use cases that haven't been shared publicly. Just saying.