I may be missing something, but it is not clear to me if you want
cryptographic security. If you do, then the only safe choice
is to use a standard algorithm (or block cipher construction,
perhaps). Sorry if that's already what you are discussing -
I don't know whether there are any established algorithms
that mix in a byte at a time. (though the argument that they
are aiming for avalanche properties is pretty strong).

(The history of the submissions to the SHA3 contest
http://csrc.nist.gov/groups/ST/hash/sha-3/index.html
shows it's not easy for even the experts to get it right, and
that it can take a long time for problems to be noticed,
even if you can convince tons of other experts to look
over an algorithm)

If you don't want cryptographic security, there may are
probably cheap things you could consider.

Brandon


      

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