No need to hack the code, the password algorithms are part of the PDF standard, for all to see. Having said that: Acrobat 5 compatible passwords (40-bit RC4 encryption) can be bypassed because 40-bits is small enough to generate a table of all possible keys (called a Rainbow table). You can't crack the password, but you can crack the file. Acrobat 6 introduced 128-bit RC4 encryption. Acrobat 7 has 128-bit AES encryption. In both of these cases, Rainbow tables are not practical, but the password is limited to 32 characters, ASCII. Short, plain, passwords are hacked using a dictionary attack: a file of thousands of common passwords is tried, followed by exhaustive search over all passwords. Up to about 6 or 8 characters, a password can be found in at most a couple of days. So if you use one of these encryption methods you should use long (12 or more characters) pass phrases (yes, spaces are allowed). Acrobat X takes it one step farther, using 256 bit keys and AES encryption, and allowing very long pass phrases (up to 127 characters) in any language. In addition, the Acrobat X password algorithm was deliberately designed to run slowly, so it takes a long time to do a brute-force search. You still want to stay away from dictionary attacks, though.
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