Why won’t Governments just hand out more permits to compensate for the ones we’ve bought up?

Because they can't and because we’ll be watching. No more credits can be created from now until 2013.

It is entirely legitimate to buy up and destroy permits – nobody has to sell them to us and they will only do so if they are offered a price they will accept.

Governments cannot explicitly compensate companies for the credits that have been purchased and cancelled out of the market by individuals. They may want to try, but the rules don't allow it. And even from 2013 when a new set of rules and a new batch of permits will be created they won't be able to. Caps will be set by Europe and not by individual Member States and it was the EU who made sure inviduals could get involved in the market in the first place.