I see two issues here:

1) false sense of security. I'd assume if I protect the file with a
password the data is secured, which is not the case. So please make it
clear (by a prompt and within the help/faq) that the password does not
encrypt the data.

2) sharing files via the Web - i.e. I might wanna put my file on an
iDisk, which (unfortunately) does not encrypt while syncing.... but
because of #1 I might assume my data is encrypted and safe, which is
not the case.

Mike
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