Even ignoring the political aspects, like the fact that EFF/ACLU don't want to be in this business (as you note)…

This system will likely fail in the same way that almost every new DRM system has failed: someone will implement the "secure element" badly and its keys or secrets will get exfiltrated and cloned.

It's one thing to keep a cryptosystem secure when its users appreciate that system (e.g. hard disk encryption or TOTP 2FA)… but it's very hard to keep cryptosystems secure when millions or billions of people are unwilling and resentful users having those systems imposed on them.