Thanks a lot for your detailed feedback!

Here is a list of improvement opportunities:
(1) Although C.O.B. comes with a default set of Backup Sets, I believe there should be greater flexibility to Create, Edit, Save, and Delete Backup Sets - AND users should be able to schedule each Backup Set independently.
This is planned to implement.
(2) The scheduling utility looks a lot like WinXP's built-in "Scheduled Tasks" - but my C.O.B. backup doesn't show up there. Not sure if this is an error or intentional design.
COB uses Windows scheduler (XP or Vista, depending where it is installed). COB task is hidden.
This gives us not only the benefit of flexible scheduler but additionally the security - Windows scheduler automatically impersonates user whose backup this is and backup executes under the rights of that user, making impossible to access others' files using backup.
(3) It would be great to have an integrated viewer to explore the contents of the C.O.B. stored folders (or buckets). Even better, users should be able to download, upload, and delete files and folders from within the viewer.
You already can browse the contents of snapshots using "Restore" dialog. (I'll add screenshots later)
Using advanced options of this dialog you can also restore only a subset of backed up files (selecting some of them), and/or restore files to particular folder vs original places.
This dialog will be significantly improved in further releases. In particular, deletion of individual files and whole snapshots will be added. (Currently deletion of snapshots resides in "Manage snapshots" dialog).
What do you mean under "uploading" files? How do you see it?
(4) Not sure how to optimize "Network Setting Limits". Hopefully this will be clarified when documentation is developed.
This option serves to allow bandwidth throttling i.e. you can limit maximal upload/download speed you allow COB to use.
This can be useful to have COB not interfere with you normal usage of internet (e.g. web browsing).
By default COB tries to make backups as fast as possible using up to all available bandwidth.
(5) There seems to be file compression in use, although the compression method is not stated. My wish is for more granularity here - give users the option to turn compression ON and OFF, and maybe select from a list of compression methods.
Why do you want this? How will you use it?
(6) For me, SECURITY is the area with the greatest number of unknowns at the moment. If a user checks "Encrypt Data", what actually happens? What encryption methodology is employed? Where are the encryption keys stored?
What is the link between the "Encrypt" checkbox and the "Set Login and Password" button? (If they are linked, I don't like this - I prefer to have my data encrypted with a private key - under my sole possession, and not using my Comodo login credentials - which are not really that private at all.)
For encryption, a separate key is used which is generated on client side. Symmetric encryption is used.
(7) It looks like critical parts of C.O.B. are installed in C:\Documents and Settings\..\Local Settings\Apps\2.0\ which appears unusual. Is this a requirement of .NET?
Thats true. COB requires .Net (and it is installed automatically with COB if you don't have it already).
That's all for now. This is a very exciting project, and I look forward to its continued development and eventual success!
Thanks again for your feedback! We're very glad to hear it.