[dnanian]

FileVault only secures your Home folder. As long as the backup itself is bootable ("Backup - all files" using Erase, then copy or Smart update to a supported FireWire drive [or USB on Intel]), FileVault doesn't have much effect.

However, please note that FileVault makes it much harder to restore individual files from a backup. It also means that you shouldn't back up while logged into the FileVault account, and that every backup will copy your entire Home folder, because the whole thing is actually stored in one big file...