“However, it involves comparison and computing power. Can’t simply test every email, website and P2P, upload and download on the fly.”
Do a google for “Carnivore”. It’s a Clinton-era thing... remember? Has the capacity to monitor emails looking for threats? It has been retired, no doubt replaced by something better.
What happens is that a user has a suspicious pattern of behavior, and then you investigate it. It’s a little like cops who target homes that use 10X the electricity they did last year looking for grow lights and pot plants.
Look — the Internet was created by the Dept of Defense. Do you think for a minute that anyone’s traffic is anonymous? It’s like going 90 on the Interstate with a pack of traffic — you might not see a cop, but the cops do show up from time to time, and some place along the line, you’re gonna be the one pulled over.
Identifying a physical location, user, port is MUCH easier that attempting to block specific copyrighted or content and let other things pass. DOD may know where certain users are, but there’s simply no way to monitor all transmission between us. And they wouldn’t want to, they’d never find anything in all the noise.