A more advanced implementation of the original coolphpobfuscator (https://gist.github.com/MasterEx/1171816) described in http://masterex.github.com/archive/2011/08/27/php-protect-the-code.html . Credit goes to Dan.

README

Usage
java -jar coolphpobfuscator.jar input_directory output_directory

Coolphpobfuscator.java

package coolphpobfuscator;

import java.io.*;
import java.math.BigInteger;
import java.security.MessageDigest;
import java.security.NoSuchAlgorithmException;
import java.util.ArrayList;
import java.util.Collections;
import java.util.Iterator;
import java.util.Scanner;
import java.util.regex.Matcher;
import java.util.regex.Pattern;

/**
 * @author periklis master_ex ntanasis - pntanasis@gmail.com
 * @forked Dan 1NTT - March 2013 - 1ntt.net USE: java -jar coolphpobfuscator
 * input_directory output_directory NOTE: if PHP files includes javascript, the
 * ; is required to terminate end line
 */
public class Coolphpobfuscator {

    // found here: http://snippets.dzone.com/posts/show/3686
    public static String md5(String s) throws Exception {
        MessageDigest m = MessageDigest.getInstance("MD5");
        m.update(s.getBytes(), 0, s.length());
        return new BigInteger(1, m.digest()).toString(16);
    }

    public static void main(String[] args) throws FileNotFoundException, NoSuchAlgorithmException, Exception {

        if (args.length < 2) {
            System.err.println("Arguments are missing");
            System.exit(1);
        }

        if (args[0].equals(args[1])) {
            System.err.println("Input and Output directory can't be the same");
            System.exit(1);
        }

        String path = args[0];
        String pathout = args[1];

        String files;
        File folder = new File(path);
        File[] listOfFiles = folder.listFiles();

        for (int i = 0; i < listOfFiles.length; i++) {
            if (listOfFiles[i].isFile()) {
                files = listOfFiles[i].getName();
                if (files.endsWith(".php") || files.endsWith(".PHP")) {
                    File input = new File(folder, files);
                    Scanner in = new Scanner(input);

                    /**
                     * Here we'll start erasing and altering stuff
                     */
                    String code = "";
                    String temp = "";
                    while (in.hasNext()) {
                        temp = in.nextLine();
                        // Hack step1 to preserve http://, files://, "//, '//
                        temp = temp.replace("://", "tHiShAcKiSuGlY0");
                        temp = temp.replace("\'//", "tHiShAcKiSuGlY1");
                        temp = temp.replace("\"//", "tHiShAcKiSuGlY2");

                        // remove single line comments
                        temp = temp.replaceAll("//.+", "");
                        code += temp + "\n";
                    }

                    // remove the deep comments
                    code = code.replaceAll("(?:/\\*(?:[^*]|(?:\\*+[^*/]))*\\*+/)|(?://.*)", "");

                    // remove collections of spaces, new lines, returns, tabs and breaks
                    code = code.replaceAll("\\s+", " ");
                    code = code.replaceAll("; ", ";");

                    // Hack step2 to restore http://, files://, etc			        	
                    code = code.replaceAll("tHiShAcKiSuGlY0", "://");
                    code = code.replaceAll("tHiShAcKiSuGlY1", "'//");
                    code = code.replaceAll("tHiShAcKiSuGlY2", "\"//");

                    // matching variables, but ignoring: $_, $(, $$, $/, $this-
                    Pattern MY_PATTERN = Pattern.compile("\\$[^_|^\\(|^$|^/|^this-](\\w|\\d)+");
                    Matcher m = MY_PATTERN.matcher(code);

                    ArrayList<String> variables = new ArrayList<String>();

                    // place every variable name in an array
                    int index = 0;
                    while (m.find(index)) {
                        if (!variables.contains(m.group())) {
                            variables.add(m.group());
                        }
                        index = m.end();
                    }

                    //Sorting list, longest variables first to prevent rename collision 
                    Collections.sort(variables, new MyComparator());

                    // rename the variables with their md5hash (with a leading a in-front to
                    // ensure that their name will start with letter)
                    Iterator<String> itr = variables.iterator();
                    while (itr.hasNext()) {
                        String variablename = itr.next();
                        code = code.replaceAll("\\" + variablename, "\\$a" + Coolphpobfuscator.md5(variablename));
                    }

                    // Write new files to output directory
                    File fileout = new File(pathout, files);
                    try {
                        // Create file 
                        FileWriter fstream = new FileWriter(fileout);
                        BufferedWriter out = new BufferedWriter(fstream);
                        out.write(code.trim());
                        out.close();
                    } //Catch error exception, if any
                    catch (Exception e) {
                        System.err.println("Error: " + e.getMessage());
                    }
                }
            }
        }
    }
}

MyComparator.java

package coolphpobfuscator;

import java.util.Comparator;

// Samuel_xL http://stackoverflow.com/questions/3408976/sort-array-first-by-length-then-alphabetically-in-java
public class MyComparator implements Comparator<String> {

    @Override
    public int compare(String o1, String o2) {
        if (o1.length() > o2.length()) {
            return -1;
        } else if (o1.length() < o2.length()) {
            return 1;
        }
        return o1.compareTo(o2);
    }
}