I need for an application on handhelds to understand whether and how
it would be possible to intercept and scramble (i.e., apply some kind
of numerical transformation) the signal coming from the microphone,
digitalized into a numerical stream and going to any software that
uses such data, including those for phone calls. This has to be done
on the lowest possible level, i.e., perhaps out of the operating
system itself.

My preferred handheld for this application would be the iPAQ, but any
answer regarding other handhelds which can be connected to the
GSM/GPRS/UMTS networks through a built-in or supplementary expansion
card will be acceptable.