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You may wish to look up your USB drive's information on security. I know that my wife's Sony Drive is very secure with the vendor supplied password protection. Something like that maybe all that you really need.
Encryption requires passkey management so you may want to consider that when you attempt to implement your proposed encryption solution.
Check out MIT's website on PGP for more details about passkey management.
In linux, most encrypted file systems are done via loopback devices. Basically, this creates a transparent layer between the user and the physical disk that encrypts/decrypts the data as it passes through that layer. Because of the nature of this, the underlying media is practically irrelevant. Check out http://sourceforge.net/projects/loop-aes/ for a solid project.
The problem is that I'll create a file on the device, then set up the loopback for that file, do the encryption, etc...
But I can't unmount the device because it's being 'used' by the loopback. Would deleting and then re-setting up the loopback device every time I want to access the info work? Surely there has to be a better way with removable media; most of the techniques I have seen apply only to NON-removable media.
I don't think you can. As far as linux is conerned, its actually writing to that loopback device, not the disk. The loopback is just a transparent interface to the HDD. Just like linux won't let you unmount a volume its currently using (e.g. /dev/hda), it won't let you unmount this loopback device.
However, you could write a simple script that unmounts both the loopback device and the filesystem in a single shell command.