It can. You just have to restore what you decrypt.
But it seems impossible to select what should be restored, or am I missing that, too?
Let’s assume that something breaks, and the user wants to restore, but not simply overwrite an e.g. Lovelace card but just a part of it. Does HA Backup currently support this for encrypted backups?
No the selection is not that granular. Only core (all dashboards, all config) and add-ons can be selected separately for restoration:
And here it would be nice if decryption was possible from within the backup/restore function without actually overwriting everything, but instead saving the decrypted snapshot to a place from where the user could do more with it.
Done:
Don’t forget to vote for your own request.
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Is this possible? I don’t see a button to vote for my own request.
If somebody else is interested in this feature request, please consider voting for it. Thank you! 
