Ok I've looked a bit more at how BT plan to use Phorm (see
http://webwise.bt.com/webwise/customer_choice.html) though there's no indication whether that's how it was set up in the previous 06/07 trials and that would probably only ever be revealed if taken to court.
In the diagram the client is connected to the rules engine but it shows that only http traffic goes there so in-between there is some protocol filtering equipment that is not shown or the diagram is wrong and the rules engine reads all the data and determines which is http.
If the former is correct then it would be trivial to route only 'opted-in customers connections' to the rules engine to determine if they currently want to be 'Phormed'. By 'opted-in customers connections' I mean that if a system like this were to be implemented the express consent of the paying customer (who they have a contract with) is required before they can asked the current web user on the connection if they agree to be 'Phormed'. They would therefore have to contact the customer beforehand by email or post to get informed consent and then it would be the customers responsibility to inform anyone using the Internet connection that they have consented.
As it is it does not comply with the law. They (in this case BT with Phorm 'aiding & abetting'/inciting) are planning to intercept the data not for a purpose they they have the right to do. What happens after the interception is irrelevant as they do not have the lawful right to intercept in the first place.
It is clearly obvious that Phorm have tried hard to comply with the law and distance themselves from the data interception and they may not be directly controlling the interception in the current BT model but they are complicit. Though Phorm have tried it is all in vain as the root of their system, their idea, is to track millions of web users and can only realistically be achieved by breaking the law. The possible model I outlined above, that may comply with the law, would gain them very few customers and not enough revenue. Sorry Phorm your business model is no go.
And I haven't even bothered with the privacy issues or the mountainous task of getting website owners permission.