3.  Can it be protected?

Ye, but it is not a free feature. Check this:
http://www.hwaci.com/sw/sqlite/prosupport.html#crypto
http://sqlitee.homepc.it/
http://www.sqlite-crypt.com/

On the other hand you can use revolution to encode/decode data before it gets 
into the database and when extracting...

Best wishes
Viktoras


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