The regulation would be on the other end. Tor won't help you when your favorite site shuts down because they can't comply with conflicting court orders from Canada and Australia (or wherever).

Sure it will -- they could run it (at some loss of bandwidth) as a hidden service. When "my favorite site" gets court orders, they can take down their official server, and spin it up somewhere else behind a Tor hidden service.

Yeah, I know -- Hidden Services need some work. As I understand, the problem is solvable, it just needs a few more heads thinking about it to get solved.

If they can't regulate it, they will ban it.

The software response to a "crypto ban" would be wide-scale steganography, I would guess pretending to be unencrypted HTTP. Good luck banning encryption!