Can I install OS X lion on a disk that is OS X Extended Journaled encrypted? Just wondering if I can, using Disk Utility, format the hard drive such that it is OS X Extended (HFS+) Journaled encrypted. Will Lion be able to install on that disk?
I'd say this is more work than it's worth since Lion clearly isn't expecting to be able to deal with the new encryption scheme. You'd be better off running Lion virtually as that's far less work to do than hacking together the parts of Mountain Lion needed for file vault 2.

The obvious catch-22 is where you need to expose that disk to Lion to get it encrypted in the first place, the recovery HD placed on that drive will allow the installer to prompt for a password and get the CoreStorage keys set up to unlock that volume for the installer.

As mentioned in the comments, it's easiest to connect your encrypted Mac to another Mac in target disk mode to get the Lion installer to run (or better to just image things) - but advanced knowledge of fdesetup and the boot process also might allow other solutions. You will likely have continual problems with automatic rebooting since Lion isn't going to know how to decrypt the boot volume nor will the Recovery Boot image want to hand off to Lion since it's not supposed to know how to handle Filevault 2 drives in the first place.


http://derflounder.wordpress.com/2012/07/25/using-fdesetup-with-mountain-lions-filevault-2/