It is but you have to intentionally keep it small and limit tickets. I think one of the issues that Defcon has is that they just don't cap tickets; historically they could not, because you could only buy a badge with cash so there was no way of predicting how many people would show up.

There are plenty of quieter, smaller conferences.

I don't think it's really a matter of limited attendance. Smaller hacker conferences in the US are not much different in terms of baseline acceptance of government/defense presence. It's more of a cultural thing, and not a new one.

(That's not to say that there aren't conferences that are explicitly anti-MIC, because there are. But if you just sample by size, I suspect you'll find no correlation there.)