There is nothing illegal about it. They could go to complete silent dispatching where jobs are just sent to their computers and they chase those. There's a lot of places that probably do 75% over MDT, and maybe only 25% of jobs go out over the air. The jobs going over the MDT are probably noise complaints, animal issues, the kind of stuff you would call a "311" number for. It could be worse, they could dispatch over Nextel. Jersey City will probably start encrypting a lot of their police traffic when their system comes online probably in Feb/March of '09. I'm sure Bayonne is waiting to flip the switch to encryption as well (if not already using it - I don't really listen). Kearney also has a system which they could run encryption on.
There usually are a couple of arguments or schools of thought:
1) I pay their salaries, I have a right to know what's going on
2) I'm a member of the press/media and therefore want to be able to cover stories of public interest.
I've heard of some cities just now put jobs that meet a certain criteria over in "the clear" so other people listening can hear them. For example fires, major motor vehicle accidents, etc.
I know in FL most people who do news gathering get their own pre-programmed radio and a stack of letters of authorization to carry the radio and be able to listen.
In NY/NJ Metro area there's a lot of incident notification groups - Breaking News Network (pager/email based - the best in the area), Metro Fire, Citywide Radio, Citywide 1 NY, etc, which you can tune into to hear some of the "hot jobs". A lot of media personnel and public safety groups subscribe to these services to be able to participate and earn their living.
In Hoboken I can tell you for sure there's memo's up in most the dispatch areas reminding people that Hoboken411 (which I think you run) has a online scanner setup and people can listen. However, as things change and information becomes more easily accessible by private means anticipate hearing less and less.
Note: From what I can gather the People who do run a lot of the PD communications don't really have anyone "in the know" helping them out with issues or consulting. I think if they knew "how" to do encryption they probably would. Maybe then you wouldn't hear that they go pick packages up 20 times a day.
-Alex