It seems to work, but partially: when opening up an encrypted PDF file from OneDrive (Internet, Dropbox, etc.) it opens ok. It prompts for the password and the contents is readable. However, since we need the PDF in out iPhone, we use iBook. So when we have the open the PDF from its original source, we then choose "open in another app" and we get iBook to open it. It asks for the password then it just displays a blank one-page document (this is the "partially" part, it only prompts for the password).
How can we password protected PDF documents in iBook?