This is still vulnerable to server-side _key_ MITM. It's the hushmail/iMessage/etc silent escrow key attack.
http://telegram.org/img/key_image.jpg
Blue in the top and bottom, white line through the middle. So little information that anybody could simply brute force the keys until they found one that matched the description well enough.
I'd happily write a little attack for that, but it's clearly not "breaking" the system enough for the bounty.