[shawnz]

Here's the problem with encrypting via the account password, directly or indirectly:

Google gets subpoena'd for your data. At next logon they capture your password and grab the key. There goes your data, including your wifi password or whatever else.

Of course I don't think that this would ever happen, and even OP's complaint is a bit unnecessarily paranoid in my opinion. But there's your answer.

EDIT: However this might be plausible if the stored key was also encrypted with some sort of passphrase or PIN that was not known to Google, which I believe is how Chrome does it currently.