Fantastic! Thanks for compiling these resources so consistently, I know first hand it isn't easy @eosgo.
This also clears up that only the hash is stored on-chain, the actual file will be stored by the block producer - "and Each BP will have to monitor file and log the info".
According to my back and forth with @rsjames and others in the gov channel, it was not possible to do with end to end encryption (user and system level). As I have gone through all the documentation, videos, discussions & whitepaper, it would appear that the current proposed EOS file system for the files themselves are not encrypted.
My original proposal to address this issue for BPs (however flawed in my initial understanding) still has some merit.
Would be interested to hear a more practical / elegant solution from others. I am admittedly still learning parts of the system (and the system itself is still being developed). If I have made a mistake or have a gap in understanding, please show me a better way of dealing with monitoring and / or filtering files on the same node (without using image classifiers) - this is how problems are solved.