1) The updraft directory is already .htaccess-protected. Anything else to consider with respect to making sure the files aren’t available for unauthorized download?
It’s also protected by index.php. It’s only vulnerable if, for some crazy reason, you decide to delete both of those files.
2) I assume we should turn on password protection. For decryption, I suspect the client will be uncomfortable about online decryption. What’s a good option for local decryption?
It’s using standard AES decryption. So, you can use any AES decryption tool you like. I don’t have a particular recommendation (few clients understand encryption!), but, there’s an example script in wp-content/plugins/updraftplus/example-decrypt.php that you can adapt to your heart’s content.
David