That's an interesting idea. I am not sure if it's possible to do that and keep the same level of performance, features, and usability that we offer. If it was, I would certainly be open to it.
Quick note: why not integrate with the major mail providers to get my address book from there instead of making me enter them one by one? You had me on board until that screen showed up..
We are working on that for web (which is in beta), I'm assuming that's what you are mentioning. Our backend is ready to do Google Contacts and Yahoo, but haven't had time to wire up the front-end. If you download our app for Android or iPhone, you can use the address book there and create Magic Circles.
That is a difficult question to answer without knowing the complete architecture. However there are cryptographic accelerators which would be of help.