Does Japan's plan to kick off P2P users violate privacy?

I just read George's piece on Japan's scheme to block illegal file-traders and at first blush it sounds good. According to a Japanese newspaper, ISP groups and copyright holders have agreed on a plan to identify, notify and eventually cut off P2P traders of illegal content. Here's George:

Content owners merely need to download the Winny, Share, and Perfect Dark and look for their own content that’s being pirated. Then all they need to do is connect to it as if they were a user and then download the content to see if it is indeed their content. Then they already have a list of IP addresses that participated in that file exchange. There’s no decryption, key cracking, or deep packet inspection going on here.

So this is a lot different than Comcast interrupting BitTorrent uploads (which George defends) or penalizing a given application or protocol. Or is it?

What Comcast does is basically identify certain kinds of traffic it doesn't like (upstream traffic) and hobbles it. Comcast doesn't really care what the content is – it could be the Bible as well as Hannah Montana. Comcast just knows it doesn't like upstream content. That has an overwhelming negative impact on peer-to-peer apps. By being so indiscriminate, Comcast is deciding – even for legitimate content -- what programs you can use and thus how you can communicate and what businesses you can run. That's not OK.

By contrast, the Japanese ISPs are not screwing with P2P. Copyright holders are downloading their own content over P2P, checking to see what IP addresses are involved and reporting them to the ISPs. So there is no prejudice against P2P, just against illegal copiers. The Bible, political videos and obscene screeds all get through – it's just illegally shared copyright material that doesn't.

But I started wondering, what if a P2P system starts masking IP numbers, so the system can direct the traffic but it doesn't share the information with other users? That seems technologically feasible to me and puts the copyright industry back to square one.

As it turns out (but this is vague) Winny is somewhat based on Freenet and claims to offer just such anonymity features. So how is it that content owners can just obtain the IP addresses of illegal downloaders? This odd Wikipedia page reports that two Japanese users were arrested after illegally downloading content on Winny, but that police were only able to identify them via the less-anonymous bulletin board system. So it's not clear what exactly is involved in identifying someone but it seems to be quite a bit more than LimeWire-style broadcasting of IP numbers.

I'd like to know more about this process and exactly how invasive the identification is. Given Hollywood's newfound excitement about getting ISPs to do their piracy blocking for them, this could either be a win-win or a slippery slope.