Going off topic here, but i think the fundamental issue with smilies is that many of those suggesting them want them to work in the way that they do in instant messengers, which isnt going to happen. They would like to SHOW smilies to others, not just view them, as far as seing them localling, i guess that is the users choice... however i believe it would requires a significant change in the way the current channel/query/etc mdi windows function/render. Unlike the current method that just writes lines to the window, it would need to actually render lines with the images in place... work more like a picture window. Which i think is a bad idea.
As far as encryption goes, while SSL is good, it doesnt stop anybody actually on the irc network from seing your text, their are many reasons why somebody could unexpectedly or unnoticably (to those conversting) see a private conversation (regardless of weather its in query or channel). Just a few examples are nosey opers using fjoin or watching from outside a channel, a services or server issues unsetting a restriction or allowing somebody into a channel that should not be their, and so on.
A generic method for handling text encryption would be the best idea, the actual algorithms and such i think could be provided by the user (via a dll etc). Just the ability to handle it globally rather than needing to use events and echo everything. (because that method creates issues of compatibility with other scripts)