Bitcoin needs to see TxOut amounts so it can add them up and make sure the transaction includes any necessary fees.
A good observation. I'm not sure exactly what fees are levied but I observe that the majority of transactions do not incur any. Would it not be possible for Bitcoin to assess the fees to be zero while witholding the amount information.
it seems to me it just makes things more complicated and more likely to be exploited.
I suppose if the current integer overflow bug had been an encrypted transaction buried under several thousands of blocks then recovery would have been more troublesome.
Also, this: "All the network nodes try to decrypt the message with each of their public keys" ... won't scale. Busy nodes will have more and more public keys over time (as they give out different receiving addresses for each purchase transaction), and trying them all whenever an encrypted transaction comes over the wire will take an ever-increasing amount of time.
They only need to bother checking them if they have reason to believe they are the beneficiary. If they don't want to bother then they don't have to and the system still works. The equivalent scaling problem you mention applies with regards to the network checking normal transactions as the useage ramps up.
If you're losing the benefit when you spend the coins anyway, it seems like a lot of work for hardly any gain.
If encrypted transactions were made the default then then it would be much more difficult to assess at any given point who currently holds bitcoins. As they are spent, information is revealed about who used to hold them but their current holder is again obscured. The value of knowing who currently holds the bitcoins is probably vastly more valuable than the value of knowing who recently held the bitcoins and so I think the encrypted transaction proposal is helpful.
The "it seems like a lot of work for hardly any gain" obsevation could be equally leveled at the current scheme of using a new bitcoin address for change transactions which has the added proven disadvantage of losing bitcoins when reverting to saved wallet files. Bitcoin seems to be reliant on the assumption that a lot of extra work is justified for any gains in anonymity and privacy.