antibyte, I tried to customize FE's library from FE7 to FE8b9 and keep anything related to bluetooth and wireless from FE7, I also replaced libsec-ril.so using version from my region, and now Wireless Tether + WEP Encryption is just work using any of your kernel. So I guess my mistake for judging the problem is related to your kernel! Waiting for A/V Sync Fix for your kernel it's helped eliminating crackling sound without short sound bug!
antibyte, about Wireless Tethering (WT), I think it's related to your kernel. I have WT working perfectly (also encryption) with FE7 kernel but when I use kernel from FE8b4-FE9b1 (only kernel) the WT doesn't work. Did you change anything related to this? From here: kernel configuration related for tethering are CONFIG_NETFILTER, CONFIG_IP_NF_IPTABLES and CONFIG_NETFILTER_XT_MATCH_MAC
