Yes, you can change the physical machines name once the encryption is there. This will not have any effects on the database at all as the MEE database only looks at the objectID and not the machine name.
One thing you might want to do is if you do change a machine name, change it in the db as well, just right click and rename, that way you wont get confused.
i only asked as i thought the information that the client sent to the server included both machine's name and ip for the purposes of a force synch from server to client.
I appreciate the server wont change the db object name to reflect the new physical machine name - but I thought I had seen messages before when force synching server-client to indicate it was trying by computer name when it couldn't contact the ip
The computer name is reported to the database during synchronizations, it just doesn't update the name of the object in the database. There is the RenameMachineToNetworkName script command that you can use to rename all the machines in the database to their proper network name.
This is documented on page 106 of the Scripting Guide PDF.