If the mail is sent unencrypted the admin can read it. What I have is a script that encrypt incoming e-mail with the users key, so that they are stored encrypted on the harddrive. That at least protect against an intruder reading past e-mails. I use a Perl script written by Mike Cardwell for that.
Another service you might like to have for your users is WKD/WKS, so that senders clients can automatically fetch the public key for your users.
It’ll be easier than running uncracked games. It’s difficult to say how well your games will run in general.