Definitely something to consider. It won't be right for everyone. Here's the assurances I can give:

1) All database/server/cloud credentials will be encrypted, although not a one-way hash. They will be decryptable using a key not stored in the database or on the database server.

2) The backup will reside in the user's S3 account, not ours.

I just got home and only have a little time yet tonight to hack on this, but I expect to have a very functional beta by tomorrow afternoon.