No, I actually thought of AES256-CBC:
https://en.bitcoin.it/wiki/Wallet_encryption
Exactly what I said. AES is encryption. It's not applied "repeatedly". The password is HASHED repeatedly (in this case with SHA512)
PBKDF2 does exactly the same thing
http://en.wikipedia.org/wiki/PBKDF2
The encryption can still be AES with PBKDF2
So it works like this.
User's password = password
Hash the password, lets say 100,000 times to slow brute force.
100,000 times: password = Hash (password) ..
Use the end result of that 100K hashes to encrypt with AES
You are right, that is exactly what should be done. Thanks for straightening this out!
Your turn, eXo_coin...