This is really off-topic but... Not if you're not transmitting when you move- and, once you've broken a few other systems, a cracker worth their salt would use them as proxies. I'm sorry, but there's no way that putting an entire city on a shared access wireless network won't create security problems.
And that differs from what we have now how exactly? At least this way the locations would be detectable in real time, as opposed to just having an IP where you need the ISP to divulge information first. I dont contest that there are a lot of issues to be sorted out, I pointed some out myself, but its not going to be a situation where script kiddies and crackers alike can just log on and committ cyber crime with impunity as you suggest. (well, no more than it is today...)

About active monitoring, as I alluded to in my previous post, I think thats the whole point of the thing. Google bots will monitor everything you do, I would imagine there will be a very strictly enforced access blocker, certain sites allowed, certain sites blocked. All operating on a dont like, dont use basis. As I said I dont know, havent used the thing.