I think the essence of your argument is that this technology allows for targeted oppression and that is bad. I agree that targeted oppression is bad. I do not agree that perfect surveillance is inherently a bad thing, as seems to be the opinion in all of these privacy debates.
Perfect surveillance could be amazing for society. Here are my hypothetical situations which are more or else as likely as yours. Let's go for dramatic impact first.
There's a depressed kid in Bumfuck, Texas. Let's call him Ben. He hates it there. No one listens to the music he likes and he's bullied daily because he's fat. He's on 4chan a lot and they get him, unlike his school counselor or his parents, but he's forced to go to school 7 hours a day. Scotty at the NSA, he's in charge of depressed fat kid analytics for the state of Texas. Scotty is a psychology grad who specialized in childhood and adolescent development. He sets up filters that identify potentially suicidal teens for his region. At this point Ben is just another teen. But then Ben starts researching .38 caliber revolvers. His search history doesn't indicate any prior interest in guns, so this triggers an alert. Scotty sees the alert and decides to monitor Ben for a while. Ben continues to researching the .38 and only the .38. At this point Scotty runs a search on Ben's family's gun registry and finds out that Ben's dad owns a .38 for home defense. At this point, Scotty knows what's up and gives Ben's school a call. He talks to the counselor and tells Ben's story. The counselor didn't know about the bullying, so she calls Ben out of class one day. She tells him that she's heard he was being bullied and Ben tells her who it is. The two begin weekly sessions to help Ben recover. At the same time the counselor asks Scotty about the bully. Scotty runs some searches and he informs her that it seems the bully has spent an inordinate amount of time reading about alcoholism. She begins sessions to help the bully address his issues at home. She also rearranges Ben's schedule to help him avoid the bully. In the days of digital privacy, the bully catches a bullet along with six other innocents.
This hypothetical assumes a lot of things, much like yours. I assume a good school counselor (though maybe one who can't monitor the internal thoughts and feelings of 800 kids). I assume an NSA employee with proper training. I assume a government that cares more about curbing school shootings than about setting up stings on Muslims.
The possibilities for a perfect digital surveillance in a decent society are endlessly beneficial, especially in the realm of identifying mental health disorders early. Fuck, any medical condition. Let's say for a month I've got headaches, but I don't go to the doctor because I don't feel like waiting in a waiting room and my health insurance deductible is too high. I look up headaches on WebMD. The headaches go away, but a few months later I notice that my toes are just constantly numb. I google it and assume it's just the cold weather. Unknown to me I've just moved from the "headache googlers" list which contains pretty much everybody, to the "headache + numb toes within a few months of each other" list. These lists and filters are of course created by some of the foremost doctors in the country (I'm assuming for this hypo). At this point I get a friendly call from my doctor that I should come in for an MRI, because it has become likely that I have a brain tumor. Without surveillance, I die, because by the time I go in because my nose is bleeding every night, the cancer has spread throughout my body. (All this medical stuff isn't accurate at all, for all those wondering).
You get my point. I just don't want to see this type of technology written off as inherently evil. Can it be used for evil purposes? Yes. Is atomic energy inherently evil? No. Can it be used for evil? Yes. And yet you're not writing a multi-paragraph essay on the potential HUGE devastation of nuclear weapons and calling for immediate disarmament. There is no rally in DC soon that will attract hundreds of Redditors calling for Obama to dump the nukes in the ocean.
If you want to talk about ending racial profiling, let's address how to stop it. If you want to talk about drug reform, let's do it. The government has all the power they need to oppress already. It's by actually taking the time to change the political tide on issues like these that will decide whether we end up in your hypothetical dystopia or in a better one. Whether or not the NSA spies on people won't.