"I really like the idea of this because should the laptop be stolen, no seriously personal data can be stolen. Should the laptop be broken, it’s essentially commodity hardware."
What does it have to do with a Chromebook / terminal exactly? I've got exactly the same for my regular workstation...
I'm using a Debian Linux workstation for development using full disk encryption. Should it be stolen the account would be locked up (I always lock it without even waiting the timeout when I stand up: one shortcut and it's locked and you can't unlock it without my password) so there's no way anyone is accessing my data without my password. No, sure, if an attacker knows my password (and/or the boot-time disk encryption password) he can access my data, just like he could access your cloud data should he know your password.
Should my house burn and my workstation (be it a laptop or a desktop) be broken, it's essentially commodity hardware too. What makes you think I don't have automated backup scripts? (gpg + scp FTW).
There's simply no way I'm accepting latency back/forth to some cloud thing. And the "bad" thing with physics is that physical ain't going to change: short of major scientific breakthrough no matter the $$$ we're not getting better latency anytime soon.
Also, I consider an environment which can suddenly "stop working" because something changed server-side to be fundamentally broken: I'm in total control of my dev environment and there isn't a single update that can be made without my consent.
You're giving up all that power once you decide to develop using a "terminal".
Of course that power comes at a price: you need to be able to install and configure your OS so that it uses full-disk encryption, you need to write a few scripts taking care of automated encrypted backups, you need the discipline to "lock" your system everytime you stand up (by now it's a habit), etc.
But once it's set up, my dev environment doesn't change.