Disadvantages

Your probably have to adjust some codelines to get it working
The downside of POBS is that it won't guarantee that your code will work properly without adjustments. This has to do with the way scripting languages like PHP deal with variables. As you probably know you can dynamically define (maybe "use" is a better word) variables in PHP. This poses a problem for POBS or any other Obfuscator. But you can deal with it by scanning your code for things like $$VarName and parse_str and edit your code or add variables to the array of excluded variables ($UdExcVarArray).

I must say though that many of the coding adjustments that I suggest are actually good (and normal) coding practices. Like starting every constant with a lower "c" and putting the rest in uppercase. Or naming all variables of a certain kind according to a naming convention.

Since I don't make any money out of POBS (I only improve it for you guys, which makes me feel like the son of Mother Theresa) I hate to see disappointed faces. So don't think you don't have to put effort in getting your code to work. If you want POBS to replace the variables (besides functions and constants) in your application, you might need to spend a few hours adjusting your code. Replacing functionnames and constants probably won't give you any trouble (providing you don't define constants like "HREF", "ALIGN" and "SRC").

See Codingtips and Debugtips on how to prevent problems and get your code working (I got my 300 Kb code working without my own advice so there is no need to get discouraged).

No password protection
POBS will not protect against the proliferation of passwords used in your sourcecode. I.e. if your PHP program connects to a MySQL database you probably use the PHP function "mysql_connect". One of the parameters is a password. POBS doesn't obfuscate the function (since it is not user -defined) nor the password. You might make a deliberate complex function that generates a password but a hacker could just call that function and see what it returns.

For me, protecting against database passwords or stuff is not really important because POBS is essentially targeted at applications that need to be deployed. I.e. on a customers computer. In that situation a customer might have full access to the computer and deals with his own data in the database anyway.

Zend Encoder and Microcode Encoder do protect passwords since they encrypt those too (they probably encrypt the whole PHP file like "WinZip + password" would do).