Usb-secure is a project mainly written in ..., it's free.
Most of this code is borrowed from http://www.cneophytou.com/2008/01/30/simulating-encrypted-physical-disk-in-os-x/
I seem to have lost the non-binary versions of these, so take all normal caution with them. For pure source see the above URL.
Drop an empty USB volume onto "Secure USB Initialize.app"
Put "Secure USB Handler.scpt" into /Library/Scripts/Folder Action Scripts/
Add Secure USB Handler as a folder action on /Volumes
SetFile -a V /Volumes/USBVolume
Drop a secure USB volume onto "Secure USB Restore.app" to revert, you will be prompted to save the secure volume