I don't profess to know much about security, but unless TrueCrypt does block-level encryption, AND dropbox does block-level syncing, wouldn't this scheme work out really poorly for storing large TrueCrypt volumes?
Of course, that's infeasible for file system encryption and isn't how TrueCrypt works. An idea is to use a one-to-one mapping between TrueCrypt blocks and DropBox files. Write a file system watcher script that picks up changes to files in the DropBox folder and mirrors the changes to the corresponding blocks in a TrueCrypt volume that lives outside the DropBox folder. The other way around, too.
Do you see anything obviously wrong-headed with this approach? I admittedly don't know the details of TrueCrypt's crypto. If it already does file-level rather than block-level encryption, these tricks wouldn't be necessary. But file-level encryption would seem to leak way too much information to satisfy the truly paranoid.
At this point I have been playing around with 700mb file volumes. When I make an addition to the volume, it takes about 2 minutes to sync. I have not tested deletions yet.