rar2fs is a FUSE based file system that can mount a source RAR archive/volume
or a directory containing any number of RAR archives and read the contents as
regular files on-the-fly. Non-archived files located in the source directory
are handled transparently. Both compressed and non-compressed 
archives/volumes are supported but full media seek support (aka. indexing) is
only available for non-compressed plaintext archives. In general support for
compressed and/or encrypted archives is "best effort", highly depending on
what type of information the archive contains and by what method it is 
accessed.

Encrypted archives are supported but since rar2fs is completely
non-interactive it requires the archive password to be stored on the local
file system in a file in plaintext format. This of course is a major security
limitation in itself. If you really need to use this feature, use it wisely.
The author(s) of rar2fs will not be held responsible for encrypted
information being exposed due to this limitation. If security is really an
issue some encryption on file system level should be considered instead.
A FUSE based encryption file system, such as encfs, has proven to work very
well together with rar2fs.