The main difference being that the modification was code sent to, and then executed by, the end-user's browser in the form of a Java applet.

I personally believe that Lavabit (a tiny company composed of a few dedicated folks) would rather shut down service than do something as underhanded as what Hushmail did.

In either case, the end user is relying on a proprietary system/company to fight the good fight for them, which is foolhardy if your well being is on the line. Those in need of strong privacy would probably use PGP+tor for communication anyway.