Xtracycle has a topic on this in their forums. You should be able to lock this bike up like any other bike (e.g. u-lock on back, cable lock up front).

They mention that if you are worried about the panniers getting stolen, you could screw them to the frame, but they also mention they haven't gotten any reports of the panniers getting stolen......yet (no one must have an xtracycle in NYC).

In terms of the hills question, it all depends on the gearing. If you are maxing out your granny gears on your non-xtracycle bike, you'll probably have problems with a loaded xtracycle, and would probably want to change your gearing set up. If you have a couple to spare (as in the beautiful 34t), that you never use at all, you should be fine.