encryption of root filesystem

[Boryeu Mao]

In building a bootable DVD image (in the manner of
SL-65-x86_64-2014-02-06-LiveDVD.iso), is it possible to encrypt the
system?  If so, should the file LiveOS/squashfs.img be encrypted, or
the file ext3fs.img contained therein? and what other changes (for
example in the boot configuration) would be needed?   Hopefully this
is a question not outside of the design goals.  Thanks in advance for
any help/pointers.