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The BitComet PHE method is not published. It is incompatible with MSE/PE.
MSE/PE uses a [[D-H]] exchange combined with the infohash of the torrent to establish the key, then it uses [[RC4]] to encrypt the data. The D-H exchange helps minimizing the risk of passive listeners, and the infohash helps avoiding [[man-in-the-middle attack]]s. RC4 is chosen for its speed. The first kilobyte of the RC4 output is discarded to prevent a [[RC4#Fluhrer, Mantin and Shamir attack|Fluhrer, Mantin and Shamir attack]].
The specification allows the users to choose between encrypting the headers only or the full connection. Encrypting the full connection provides more obfuscation but uses more CPU time. However, PE in µTorrent beta 1.4.1 build 417 or later only supports full encryption for outgoing connections, but will accept both obfuscation levels for incoming connections.
To ensure compatibility with other clients that don't support this specification users may also choose whether unencrypted incoming or outgoing connections are still allowed.
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