Forgive me if someone has already mentioned this, but i couldn't find it. Basically, I am asking for the ability to password protect $compress'd files, as can be done with most file compression formats. I don't know if zlib already supports this, so if it is too much trouble to add, I won't push it.
One of the problems with the open-ness of mIRC scripting is that, well, anything your script can do can be done by any other script (thus, anyone with access to your computer/files). So any sort of protection that you can script would be inadequite, with the exception of hashing passwords, which can only be done by the one accepting the password.
You are assuming that the password would be stored, which wouldn't necessarily be the case. For instance, WinZip does not store the password used to encrypt a file.
I was assuming that he was using the password to authenticate to a remote host that required it to be sent in ascii. I didn't realize data could be compressed with a password.