I think you guys are worried about the wrong problem.
The E911 stuff is still years off. Even when it is deployed, it will probably work only during a call, though this may depend on the exact method.
In my opinion, idle cell registrations -- which are already standard cellular system practice -- represent the far more serious privacy threat.
It's worse than you think. Most cellular base stations serve 7 cells, and each cell uses receive diversity (mutiple antennas for the same cell). There is also a designed overlap of the cells from basestation to basestation, otherwise you get blackout spots. Although the effort to use this information to locate a certain phone (provided the power is on) is not trivial, the hardware is all in place. Right now, the basestation must determine which cell the user is in, but the capability exists for it to narrow down the location and send that information back to the network. It probably won't (easily) have the resolution of GPS, but once you know that much, you can just home in on the phone's signal.