I don't what NYS Regulations specifically require that Amazing Chart's Backup utility should make .enc backup files containing imported items. If the policy makers went that in depth kudos to them.

That flash drive method seems pretty inefficient. It's simple don't include imported items in the backup. Just backup the imported items folder directly using your offsite backup provider (e.g. Carbonite, Mozy). That way the imported items will be incremental while your database will likely be less than 200 MB. That way it'll just be your database, probably < 200 MB per night. I have the exact same connection.

You should probably use something like this on site: http://www.amazon.com/Fireproof-Waterproof-External-Recovery-SL1000GBUSB20/dp/B001TNR8EI