Regarding your practical sense argument:
I don't see how its strange at all to have an expectation of privacy even if they data mine it -- seems like just a term in a contract to me. For example, if you hire me to protect your valuable manuscripts in my more-secure safe, but grant me in this agreement the exclusive privilege to read these documents with an NDA attached -- would it then obviously follow that I deserve no privacy for those documents AT ALL because I handed them to a third party? Of course not. Many people know and find acceptable that Amazon uses data about your purchases to build suggestions for others -- those same people would consider it completely different to go around telling others what you purchased (government or otherwise). I'm sure even you agree that the expectation that GMail not publish all your emails in a blog post is reasonable -- so the belief in needing a warrant to see them isn't that much of a stretch.
My point is not that this is the current legal interpretation -- I understand its not. I'm simply pointing out that it is perfectly logically consistent from the user's viewpoint to expect this. Furthermore, it seems like if I were to go out of my way in our contract to specify the privacy of your email the government would still think its fine to read it.