I have been hearing rumours that ISPs in Asia (possibly Europe or the Middle
East) are dropping encrypted packets entirely.  Does Google know
if this is true, and if so, is there any accessible information about this
issue?  Any feedback you could supply would be truly appreciated.

It is common practice for some lower quality isp's to block access to
certain ports either incoming or outgoing, such as port 21 (ftp), in
order to reduce bandwidth usage or curtail certain undesireable
services (such as kazaa).

Insofar as that goes, it is possible to block access to some commonly
used ports for encrypted traffic, such as the SSL port commonly used
on websites to secure credit card transactions.

However, if users know that these ports are blocked, it is usually
possible to just use an arbitrarily assigned port, which will not be
blocked. This means that isps would have to look at each packet to
determine if it contains encrypted information or not. Since any type
of program may use the internet to transfer a variety of data, it
would be very difficult to distinguish most forms of encrypted traffic
from non-encrypted forms.

I have not heard of any software available in routers that will detect
and block packets that include encrypted information, and from my
knowledge of the subject, it is my opinion that it would be very
difficult to do so, for a variety of technical reasons.