It would be an internal thing inside bitcoind?
Executable via bitcoind JSON call (so also - from command line)?
No need to make GUI button for it?
How the password should be proivded? On cmd line is very bad - unless its a pubkey (opengpg)?
Actually, I really like the idea of a GUI button. Encryption is possible with other tools (encrypted filesystems are nice, and easy to manage with freeotfe (windows) or cryptkeeper (linux desktops and similar). While it would be nice to have a one stop shop, or a second layer of encryption, its not necissary.
Frankly, I think this is a far more useful tool than tends to get credit. I don't have a lot of bitcoins, but, enough that I would be quite unhappy to lose it all (especially given their current sell prices). I don't really need immediate access to ALL of my coins.
Now, I can easily split out my coins, by firing up a new instance, with its own wallet, making an account, and transfering my funds there, and saving that wallet.... but... that is a lot of workaround for want of an export function. I would much rather, make a new account, transfer funds, then export that account (or the old one).
Of course, adding encryption directly would have its benefits too. Instead of just allowing a whole wallet to be "locked" why not allow it on a per account basis. So, Account "spending" is not password protected and has a few coins in it.... account "savings", encrypted right in the wallet. I can access it almost as easily, but, not quite. Maybe encrypt the account numbers with it, so someone who gets ahold of it can't even determine what accounts are there (so as to try and figure out which one to target).
All in all, thats a minor problem, I am much more interested in the ability to export part of a wallet and save it.
Also.... password on the command line is "bad" but... not THAT bad. Especially in these days of individual desktop machines. I would hope that anyone working on a shared/public machine knows the risks, and knows why to avoid password on the command line. So its a good reason not to rely on it or use it in many circumstances but, its not really a good reason not to have it available.