I don't believe people encrypt their stored procedures to keep anything proprietary secret because, as you've so very adequately noted, just about everything that can be done in SQL Server has been done already.

But I'll bring up the recent bouts with plagarizm that some of the articles on this fine forum have gone through on other sites... people are lazy and greedy. If they can steal something instead of building it themselves, they will. Encrypting code will at least make them jump through a hoop or two to support their "new" product. It will also keep the number of stupid user tricks in the form of code modifications to a minimum.

I personally don't like encrypted code either on the vendor or user ends, but I can see its merits.