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Telegram's "encryption" does not protect in any way against dump/search server side (outside of secrets chats).
Telegram's "encryption" only protects from your ISP spying, and it's the kind of encryption that everyone implements. Any website that does not implement such encryption would show a big red "Not secure" warning in your browser.
In their explanation it was specifically stated that it should be either impossible or too difficult. Keeping keys and content separately, that's what it's about iirc. Either way the point of telegram is not in privacy for everyone. You trade protection for convenience (cloud data and great clients), and if you want you can use secret chats. That's it. Seeing their user base, it suits most people. We'll see if their server data gets leaked or something, though it didn't happen yet.
They're lying? Encryption at rest does not protect at all against the server snooping around. When you send or receive a message, the server has to see it in plaintext unless you have E2EE. So there is a way for them to access the plaintext of any message you receive, and it happens automatically billions of times per day. It's pretty easy.
That's wrong. There is no plaintext transfer. While a lot of stuff can potentially happen on server every second as you said, it doesn't happen according to them. I don't trust that fully either but that's their argument. You can look up encryption schemes in their faq.
I didn't say that there was any network plaintext transfer. I said the server needs to have access to the plaintext at some point.
That's not actually what they say, because it would be the cryptographic equivalent of claiming they invented a new color.
They talk about encryption at rest without mentioning the rest of their infrastructure to confuse the hell out of people that don't understand encryption. Given your comments it seems to work.