XOR a file against a key

bash can't deal with ASCII NUL characters, so you won't be doing this with shell functions, you need a small program for it. This can be done in just about any language, but it seems easiest to do it in C, perhaps like this:

#include <stdio.h>                                                                                                              
#include <stdlib.h>

int
main(int argc, char *argv[])
{
    FILE *kf;
    size_t ks, n, i;
    long pos;
    unsigned char *key, *buf;

    if (argc != 2) {
        fprintf (stderr, "Usage: %s <key>\a\n", argv[0]);
        exit(1);
    }
    if ((kf = fopen(argv[1], "rb")) == NULL) {
        perror("fopen");
        exit(1);
    }

    if (fseek(kf, 0L, SEEK_END)) {
        perror("fseek");
        exit(1);
    }
    if ((pos = ftell(kf)) < 0) {
        perror("ftell");
        exit(1);
    }
    ks = (size_t) pos;
    if (fseek(kf, 0L, SEEK_SET)) {
        perror("fseek");
        exit(1);
    }
    if ((key = (unsigned char *) malloc(ks)) == NULL) {
        fputs("out of memory", stderr);
        exit(1);
    }
    if ((buf = (unsigned char *) malloc(ks)) == NULL) {
        fputs("out of memory", stderr);
        exit(1);
    }

    if (fread(key, 1, ks, kf) != ks) {
        perror("fread");
        exit(1);
    }

    if (fclose(kf)) {
        perror("fclose");
        exit(1);
    }

    freopen(NULL, "rb", stdin);
    freopen(NULL, "wb", stdout);

    while ((n = fread(buf, 1, ks, stdin)) != 0L) {
        for (i = 0; i < n; i++)
            buf[i] ^= key[i];
        if (fwrite(buf, 1, n, stdout) != n) {
            perror("fwrite");
            exit(1);
        }
    }

    free(buf);
    free(key);

    exit(0);
}

(this needs some more error checking, but oh well).

Compile the above with:

cc -o xor xor.c

then run it like this:

./xor my1MB.key <my1GBfile >my1GBfile.encrypted

With GNU tools, you can do:

paste <(od -An -vtu1 -w1 file) <(while :; do od -An -vtu1 -w1 key; done) |
  awk 'NF!=2{exit}; {printf "%c", xor($1, $2)}'

You need a shell (like the GNU shell) with process substitution support, a od with support for the -w option (like GNU od), and GNU awk for xor() (and the ability to output the NUL byte which not all awks do).