I don't mind piping out binary files to grep for things.
I do it for syslogs at work anyways. All the files are stored in gzip format and I have to use 'gunzip -c' to read them.
However, Log files are definitely a weak point for Linux. A huge pain in the ass. If it's a mostly-text file with something like null terminated fields then it would make things a lot easier and more efficient to parse.