Protect each user account in Lion?
As you know - the root user can undo anything that another admin/root does, but since all calls to sudo are logged, so you could use that to deter and detect access. If you only need to discourage idle copying/browsing, the command below will restrict access to all but the root user and the owner of the directory.

sudo chmod go-rx /Users/username


Unless you are going to physically restrain the mac (to prevent access to the insides) and use a firmware password to prevent booting from an alternate OS where the "bad actor" can bypass all account restrictions and permissions, you'll need to consider installing Truecrypt or another actual encryption tool. It has a plethora of options to encrypt files, folders, entire hard drives, etc.

Also, for other hardening tips refer to this NSA document:

http://www.nsa.gov/ia/_files/factsheets/macosx_hardening_tips.pdf

The advantage of this over the legacy Filevault is it's more likely to be supported going forward and all of your encryption eggs are not stored in Apple's basket using just Filevault.