Civilization should have collapsed the moment a large group of people agreed that one element should disclose a specific piece of knowledge, or face punishment. If everything else if my life fails, I want to become a martyr to this cause.
I've rar'd quite a few files in my day, many with a password. The majority of them I could not remember if asked. We effectively have made forgetting a crime in the name of protecting children and stopping terrorism.
And it won't do either, merely encourage the use of other routes to planning such activities. It's not difficult to imagine a terrorist plan that has no dependence on electronic messaging. Talk about selling your birthright for a mess of potage.
When applied to having a hidden truecrypt OS, I don't think this would work with UK's laws. You give the password to the dummy OS, not the true OS, but there still being a large chunk of seemingly encrypted data on the hard drive would lead them requiring you to unencrypt that as well.
Deniable encryption schemes are meant to protect the confidentiality of data under duress. They are not meant to protect the person placed under duress.
Indeed, for some schemes, even if someone cooperates fully, they will be unable to prove that they have, which could leave them in a very dangerous situation. It will also be difficult to prove that they haven't cooperated fully, but whether that is relevant depends on the type of duress they face - you may have varying degrees of success or failure facing thresholds of 'beyond reasonable doubt', 'preponderance of the evidence', or 'hammer to the kneecaps'.
A vitally important thing to know, if you're a keyholder of such a system. Given such a disadvantage, they are not very commonly used. The vast majority of all those who use (and have used) TrueCrypt don't use hidden volumes.
It's also worth pointing out that any disk usage metadata - as, for example, is kept by any and every SSD - tends to catastrophically break deniability. I don't know of anything that can do deniability with a flash device.