Make sure you're using the --listBlocks option, so writing zero blocks is instantaneous, otherwise initializing a filesystem can take a lot longer.
Aside from that, I don't see any easy answer here... s3backer doesn't support adding/removing encryption to an existing filesystem.
I supposed you could create a "boilerplate" bucket and pre-initialize it with an empty ext4 filesystem, then for a new user you would just need to startup two s3backer's and copy the non-zero blocks from boilerplate/file to newuserbucket/file.
Tthe empty filesystem is going to be very sparse, which is why it's important to only copy the non-zero blocks. You may need to write a custom program that knows exactly which blocks to copy - but this list is fixed and easy to determine.
-Archie
P.S. This list is manually moderated for spam avoidance, so sometimes there is a delay in messages being posted.
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Archie L. Cobbs