Thanks everyone for your feedback.
Seems to me that Alex explained the issue with this perfectly.
However, having said that, it seems that rsyncrypto is a possible candidate to simplify this in an rsyncrypto+rsync setup.
I downloaded it and spent a few minutes trying to make it work, but I didnt manage yet. (docmentation is a bit terse).
Assuming that it works fine, and that it encrypts only changed files (thus addressing to some extent the scalability issue mentioned by Alex), this would pretty much solve the problem, assuming that one has enough harddisk space on the client side for an encrypted copy of the data to be backed up.
However I'm worried that rsyncrypto, although a great idea, is very much a work in progress and still shaky... I may be wrong...Anyone used it?
I would be tempted to try and merge the rsyncrypto source within rsync and add a command line argument... that would be ideal....oh well just a thought...
Cheers
Julian
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