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I suppose it may be possible to do a File And Folder backup of a Reflect image set and password protect that. But, there are drawbacks. First, you'd be adding extra steps to the restore process because you'd have to first restore down the FAF and then restore the image. This would also mean you'd have to have double the space, the size of the image in the FAF backup set to restore down to. Your Reflect image is, probably, one large file, i.e. not split up into parts. Thus, you couldn't mount the FAF backup as a virtual drive and copy the image because of the FAT32 limitation currently on Reflect virtual drives. I suppose it's possible to just read in the image from a virtual drive for a restore process with this FAT32 limitation, but if you were going to do this, I'd recommend testing this first by mounting the FAF backup, loading the Reflect image set from the virtual drive, and doing a manual Verify on the contents. However, that's still no guarantee it will work for restoring, though.
All in all, though this method is plausible, I wouldn't recommend it.
Plus, the OP said they didn't want to use extra space to go through recreating the whole backup again. Effectively, this FAF idea does that, so it's probably not desirable.