Ben Laurie has been writing terrific posts on the Phorm/BT abomination. His latest, which you can read here, discusses the issue of how Phorm could, in theory, inspect the contents of HTTPS traffic.
That this is even a topic of discussion tells you how badly this is going to go for BT in the long run. It’s kind of like that old “would you sleep with someone for a million dollars joke”. The punch line is “we’ve already established you’re a whore, now we’re just negotiating a price”.
With Phorm, BT has established that they will compromise their customer’s privacy for money. Now we just get to speculate how far they will go to do it.