Earlier quoted context omitted.
The "encoding method" is ASCII text. The data can be extracted by running "strings *.dat" on the block chain on any UNIX system. After that you can grep through the output. This is not like XORing data, or as some people have said "everything occurs somewhere in the digits of pi". The blockchain in no sense encodes all possible values, or a fraction thereof, the data is trivial to extract. This is much more like, it'…
No, it's not just ASCII text. Only miners (like Satoshi's headline in the genesis block and Kaminsky's ASCII Bernake) are able to include ASCII data in blocks, everyone else needs to somehow encode it in transaction data.
I don't know if they used Kaminsky's technique or something else but it is plain text.