The hotspot option lets you set a password, so in theory, nobody would be able to eavesdrop or hack. I don't know the technical specs, however, but I would assume that it is a reasonable level of encryption. Edit: looked it up and it is WPA. Not WEP, thankfully!
There are options to tether by USB or Bluetooth as well.
I didn't realize that you could swap the sim that easily. I always assumed (incorrectly, apparently) that the phone provider ties the sim to the device. For the sake of a few bucks, maybe one of those little adapters might be handy to have as well and then you've at least got the option to leave your phone at home if you need/want to.