For the most part it's true they could quickly generate a file, but they could have done that in 1998 as well (modulo the lack of things like Facebook at the time).
Being able to instantly pull up email contents would certainly be different in scale and scope though!
I doubt it; POP3 and SMTP are plaintext. Put a few wiretap in at major colos; build a few data centers, maintain a couple of essentially very large hashtables and it seems plausible that they could instantly pull up email contents.
It'd be a bit bigger scale than GMail search or whatever corporations use for e-Discovery in Outlook, but it'd be plausible.
Whether the government allocated budget to such a contraption is another matter; I think that would be a bigger concern than the technical plausibility of "store everyone's email for all time in perpetuity". I mean, if GMail was supposed to fulfill that vision (ha!) then it can't possibly be unreasonable for a determined government to build it.
Being able to instantly pull up email contents would certainly be different in scale and scope though!