If you intend on having a lot of players on your server and keeping the database loaded into memory I would not suggest using one database for every single player. That's a lottta lotta memory usage.
To be honest I see absolutely no benefit to using SQLite over, say, TIniFile, for mudlib storage. Loading/Saving of player data using these methods should only be done on login/logout, a file for every player, and is not slow enough to where using a system like that is necessary.
Also: Unless you figured out some way to better encrypt the packets going to-from the server, say, RSA encryption, then I doubt you're protecting against calling functions/triggers through hacking means
