I made an effect recently which was similar - MuIm effect to obfuscate a message. Altering the effect to beyond Moon was what started me thinking about mundane encryption at the time.
Disguise the Words as Written
Muto Imagonem 10. R: Touch, D: Moon, T: Individual
Allows the caster to change the contents of a letter or document, re-writing the message, changing seals, and altering signatures to create another message. The letter may also be rendered into jibberish. Useful for sending secret messages by mundane means, and also for altering official documentation
(Base 1, +1 Touch, +3 Moon, +1 very complex image and text)
Don't forget Watching Wards. Expensive, I know, but do-able.
Speaking of enchantment (and expense), think of Mystery Cults and how they might protect initiation scripts by enchanting key texts. An enchanted text that looks like and is a basic text on natural philosophy could become something else when held by magically marked initiate, or read under moonlight (to borrow a literary reference), or only after the right ritual sacrifice.
As for the whole does-a-book-know-its-contents question, I am firmly in the "it's certainly possible but probably not often" camp. Particularly if it has resided in a Magic or Faerie aura for a long time.
Otherwise there was nothing exiting in these times. Roger Bacon wrote a book about Kryptography, but nothing special (from our perspective).
But I know that not only krypthography was used but also steganography. For example there are cases known where a lord tatooed a message on the bald head of a slave, waited until his hair was grown again and send him on his trip
You could make an argument that art is a mortal attempt to 'reach into' the realm of forms and that it's 'target' in the realm of forms is discernable. I'd probably require a Vi requisite in this interpretation.
Perhaps magical encryption could be done via a General MuVi effect to 'scramble' the cypher (by way of obfuscating the connections between meanings that are 'gettable' in the realm of forms) beyond the capabilities of a some proportional general level of InVe or InIm effects. Similar to spells that 'erase' other malign effects or suppress sigils or such.
To my way of thinking though, since the principal of the cipher is a mundane one, the cipher is still understandable via mundane means - the magic part of the cypher just resists magical means of decoding.
Perhaps it is possibly to create a cypher where the transformation of the code is so abstract that the key to unraveling it can only be accessable in the realm of forms - eliminating any mundane means of access at all.
Not exactly what you mean, but I remember designing a book that held ordnarily held one text, written as normal.
It also bore an enchantment (MuIm I think, but it's been a while since I played with it) that changed this text under certain specific circumstances.
I wanted a book about Parma Magica that could only be read by members of the Order, so it had a T: Touch InMe effect to detect if the person touching it had sworn the code, if the answer was yes, the text was changed to a summa on PM.
Just to be nitpicking: Your approach is not Cryptography, but Steganography, as in "the art of hiding a message". Of course, you can encrypt a hidden message. While a book-sized ink-blotch certainly hides the text, it greatly increases the books chance of being recycled as a firestarter...
Using invisible ink would be a very simple approach. CrVi-Ink that can only be read with an InVi-Spell for example.
Milk and lemon juice work just as well, but can be detected by ironing the text.
I've posted the blog entry, thank you for the aspects discussed here.
As I worked through some of the ramifications of the idea the amount of work needed grew, to the point where the post is as complete as I can bare to make it - although being honest I think I could spend another month re-working and tweaking the approach. It was time to post it and move onto some other ideas.
If there is interest I'm more than happy to re-post in this thread...is such things permitted/encouraged?