If Man-In-The-Middle is at the ISP level (or even before ISP) it seems like they could perform the handshake, swap keys supply a faked or copied cert. The only thing they wouldn't know is the private key. But it seems like if they were the client for the endpoint server, and they were the server for the victim, they could create two chains of encryption/decryption and two shared-secrets and no one would be the wiser. I think I'm misunderstanding something, though, because people say that a VPN would protect against this. So the basic question is how does an HTTPS web site cert protect against man in the middle at the ISP level?
Added: I guess the real question here is how does the guv'ment do it? Do they have a "spoof-cert" that is trusted by all CAs? (Or would this need to be a different cert for every coneivable site?)