Yet another FileVault Question

[MacD]

Yes, you are correct. It could write them anywhere.

However, in my experience, most applications which store user specific settings, history, browser cache, and all other activities are primarily stored in the Library folder, in your home folder. So, while some information is stored outside of it and achieving ultimate disk encryption is impossibel without the whole drive being encrypted... I'd rather run with knowing that at a minimum, 80% of my stuff is encrypted, vs 0% of not running Filevault.

You will be hard pressed to win a security argument taking any other approach.