As far as I see it, it is not really a currency but rather a tool. A tool that remains operational so long as it has any "value" at all.
Sure, but having it declared illegal would definitely restrict the growth potential of the currency. At the moment its proponents envision/fantasize about it becoming huge and general-purpose, with a presence in the physical world (see bitpay etc). If a large nation like the US were to declare it illegal would certainly put a dent in that.
I disagree with a lot about BTC, in terms of the economic choices made in its model rather than the technical ones, but I find it continually fascinating to watch it as a phenomenon.
Or one is subjugated by man with more guns, but still he finds a way.
I doubt it will become huge and general purpose, but it will serve well for some services.
And do not forget, the nation does nothing, there is few people that declare and change.
I see "bitcoin" as a currency not too unlike I see "paypal" as a currency. That is, not particularly.
Why foolish? Risky, but not necessarily foolish. The bitcoin exchange rate has been going up all the time. Even with simple strategies such as dollar-cost averaging you would probably have done pretty well within the last couple of years.