Uses two separate keys that work two different ways to transform the easily crackable $encode identifier into a medium-security encryption method.
To use the encryption, just copy and paste the script into your remotes and type "/encrypt on [key] [MIME count]". The key and the MIME count should both be whole numbers greater than 1, and MIME count should be less than key.
Anyone who you want to communicate with must also have this snippet and should use the same key and MIME count. Similarly you use "/encrypt off" to turn encryption off.
Thanks to Sigh_ for helping me with this one.
--Update--
Added $nitrous alias as an easy way to encrypt and decrypt strings for use in other scripts. Usage is $nitrous(string,key,mimecount). Without any properties it will encrypt the string, or you can specify dec or decrypt as the property to decrypt it.
--Update Again 12/3/06--
You will now see what you type, as requested.

alias encrypt {
  if ( $1 == off ) {
    set %enc off
    echo $colour(info) -a * Encryption is now OFF
  }

  elseif ( $1 == on ) {
    if ( !$2 ) && ( !%k ) {
      echo $colour(info) -a * You must specify a key!
      halt
    }
    elseif ( !$3 ) && ( !%mc ) {
      echo $colour(info) -a * You must specify a MIME count!
      halt
    }
    set %k $2
    set %mc $3
    if ( %k < 1 ) || ( $chr(46) isin %k ) || ( %k !isnum ) {
      echo $colour(info) -a * Invalid Key
      unset %k
      halt
    }
    if ( %mc < %k ) || ( $chr(46) isin %mc ) || ( %mc !isnum ) {
      echo $colour(info) -a * Invalid MIME count
      unset %mc
      halt
    }
    set %enc on
    echo $colour(info) -a * Encryption is now ON, using  $+ %k $+  as key,  $+ %mc $+  as MIME count
  }
  else {
    echo $colour(info) -a * SYNTAX: /encrypt <on|off> [key] [MIME count]
  }
}
on ^*:input:*: {
  if ( %enc == on ) && ( $left($1,1) != $readini(mirc.ini,text,commandchar) ) {
    var %c = 1,%f = $1-
    while (%c <= %k) {
      %f = $encode(%f,$iif(%mc // %c,m,u))
      inc %c
    }
    echo -a $+(<,$me,>) %f
    .msg $active $chr(384) %f
    halt
  }
}
on ^*:TEXT:*:*: {
  if ( $1 == $chr(384) ) {
    var %c = %k,%f = $2-
    while (%c) {
      %f = $decode(%f,$iif(%mc // %c,m,u))
      dec %c
    } 
    echo $colour(text) -a $+(<,$nick,>) %f
    haltdef
  }
}
alias nitrous {
  if ( !$2 ) || ( !$3 ) || ( $2 !isnum ) || ( $3 !isnum ) {
    return $null
  }
  if ( !$prop ) {
    var %f = $1,%c = 1
    while ( %c <= $2 ) {
      %f = $encode(%f,$iif($3 // %c,m,u))
      inc %c
    }
    return %f
  }
  elseif ( $prop == dec ) || ( $prop == decrypt) {
    var %f = $1,%c = $2
    while (%c) {
      %f = $decode(%f,$iif($3 // %c,m,u))
      dec %c
    }
    return %f
  }
}