I waited until Panther 10.3.1 came out before migrating my 30GB Home folder to FileVault. I moved my iTunes library outside of Home, but everything else stayed.
To my surprise and delight, when next I ran a Retrospect incremental backup on my machine, all the files within the Home directory were interpreted correctly and only truly changed files were copied to the backup.
(For the CD/DVD backup mentioned in the article I recommend Retrospect, and to use an "encrypted backup set" so you don't have to worry about the backup media falling into the wrong hands either.)
I give FileVault 4.5 out of 5 arbitrary points.