[geekbeast]

Just went and read your paper.

  VII. OPEN ISSUES AND FUTURE WORK
  ...
  One of the main issues of our concept is the termination problem. To solve this problem, a crypto-system that can selectively decrypt information is required.

Doing the above will make it very difficult to prove the security of malleable cryptosystem, something that Boneh, Sahai, and Waters have written multiple papers on. The approach of finding a minimum number of cycles to complete the computation seems much more effective, if restrictive in the number of operations that can be evaluated.

I'll e-mail you guys offline.

[hcrypt]

The termination problem is the major issue. You cannot generate a selectively decryptable signal from inside the encrypted code. In other words, being able to generate a halt signal to mark the end of the program flow immediately invalidates the security of the entire container.