There will be a time when each country will run their own relay for free. And they will tell you they are not tracking you.

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they prob already are here in the states.

we can choose not to use their relays?

Exactly

For safety

Is there much we can do as users and those improving clients/protocol to lower the potential of this happening in the future? Or is this just a double edged sword situation where openness is default and everything is fairly permanent and public due to the nature of relays and servers? It's not like we can just encrypt everything server side right?

Nuclear fission can be used to make energy or as a weapon... same for Nostr... same for bitcoin.

It is up to users to educate themselves, do the right thing and fight those that will inevitably use for evil.