If OS X detects the NAS as a possible backup destination, you should be able to option-right-click (hold option while right-clicking) the Time Machine icon in the menu bar, and select "Browse Other Backup Disks". The AFP mount should show up there and you should be able to browse it.
Alternately, just mount the sparsebundle. It works just like a .dmg. If double-clicking doesn't give you the option to type in the password and mount it, you can drag it into Disk Utility and mount it from there.
To answer your first question about the keychain and whether you should encrypt backups: the passwords in your keychain are already encrypted, that's why you always have to type a password (by default your login password) to show stored passwords. So there's no immediate need to encrypt.
Of course, you could add Time Machine encryption to provide a further layer of security. This is possible starting with OS X Lion and Mountain Lion (from http://support.apple.com/kb/ht1427):
OS X Lion and Mountain Lion let you encrypt the Time Machine backup
external drive using FileVault 2.
FileVault2 also uses your login password, though. So if the bad guys are able to guess or crack that password, they will have also access to your keychain information. Choosing different passwords for login and for accessing your keychain would protect the keychain passwords in such an event.
Either way, use strong passwords, password quality is of foremost importance to protect your data.
EDIT:
The OP asked in a comment how to set different passwords for login and keychain. Here is how:
If you prefer to use your current password as keychain password and change your login password, log in using another account and change your account's password from System Preferences>Users & Groups. That will only change your login password, not your keychain password.
Best Answer
The restore time is not significantly different in my case between the two backups.
My old Synology was actually the bottleneck when compared to local USB 2 and USB 3 drives - LAN use was around 70% of max on the console (80%+ of max LAN speed is about the best I could ever get out of the Synology and I think that was fluke).
If speed is key then look to use something like Carbon Copy - I find both backups and restores faster with this than TimeMachine.