Wow, this is fortuitous for me. I've been wanting something like this for quite some time, and was literally just thinking about it this morning. I've had a lot of ideas for certain small side projects that have ended up dead in the water, because I really didn't want to even risk being liable for the type of user data I would be storing.
This solution is perfect for an application that's targeting privacy focused users. I often don't sign up for services these days because I don't care for the possibility that the maintainer of the site is just casually reading through my data.
Some great use cases could be journaling, note taking, a private wiki, etc. For note taking, I actually use Standard Notes (https://standardnotes.org/) precisely because of its end to end encryption.
For me the lack of password reset is a non issue (especially with modern password managers), something that I gladly trade for the peace of mind that some random developer with database access isn't reading through my private stuff. Obviously if you built something on top of this, you would need to properly educate your users on the tradeoff they're taking.