xlCompare works with protected VBA Projects also. You may ask, that is will request a password on each opening, or what about command line mode, when there is no ability to enter password.
There are no problems. xlCompare opens VBA Project without asking you for a password. You may think that we are using backdoors or another password-cracking techniques, but you answer is simple - no.
The Visual Basic Project is not encrypted inside Excel workbook. If it is protected with a password and locked for viewing, it just means that we should request a password on opening your workbook, and hide contents of the project. But we are able to read and analyze contents of the workbook.
Specification for VBA Project structure is available on the web:
VBA File Format structure - [MS-OVBA]
You can use it to read protected Visual Basic Projects if needed.
So, there are no problems with processing protected Visual Basic Projects. Thay are processed exactly in the same way as the unprotected onces.