Nicely done. I have a fondness for the live Linux distributions to do this, but your solution is more Windows-centric. This is both a recommendation for your method and my harshest criticism of it :-)
Something I recently read about that I like the look of is Project Black Dog, a USB-based Linux server with a fingerprint scanner that takes over the hardware of it's host machine when you plug it in - much like a Knoppix-type system. Between the fingerprint scanner and GnuPG you could be pretty sure your data and activities are safe from prying eyes.
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