Quote:
the cryptoloop device "not save for journaled file systems like ext3 or Reiserfs", though in over a year using it with 2.4.x kernels and reiserfs I've never encountered any problems
The safety they're referring to involves the journaling.
Remember how a journaling FS handles a (meta)data change:
1) write to journal "making change X"
2) make change X
3) erase 1 from journal
If you do this on an ext3-fs cryptoloop device, the writes are originally scheduled in that order. However, after the encryption layer, the writes are just data writes on the encrypted file. These data writes can be performed by the kernel in any order it wants.
So, in terms of what's actually on disk, the writes might go 1, 2, 3 or 2, 1, 3. If they go 2, 1, 3 and halfway through 2 the power dies, your FS is hosed. On mount, the ext3fs driver will check the journal, decide nothing was going on, and leave half-baked data in your FS.
If the kernel doesn't panic and the power stays on, using an ext3 FS on a cryptoloop file will work. You just can't rely on the journaling to protect your data.