Twitter will not be able to establish operations n the UK or probably Europe if this knot is not untied ...
So, for example, they will not be able to set up a UK sales office employing hundreds to push their advertising and future revenue streams direct to UK advertisers - which could put them at a significant disadvantage to, say, Google.
And they lay themselves open to attack in Europe from more Euro-centric micro-blogging competitors who are able to operate within UK and EU laws.
A possible solution for Twitter is to take active steps to prevent UK and European visitors being able to read tweets that are not lawful in those territories. I'm not sure how they could achieve this ...