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Network coding has become a useful means for achieving efficient multicast, and the optical community has started to examine its application to optical networks. However, a number of challenges, including limited processing capability and coarse bandwidth granularity, need to be overcome before network coding can be effectively used in optical networks. In this paper, we address some of these problems. We consider the problem of finding efficient routes to use with coding, and we study the effectiveness of using network coding for optical-layer dedicated protection of multicast traffic. We also propose architectures for all-optical circuits capable of performing the processing required for network coding. Our experiments show that network coding provides a moderate improvement in bandwidth efficiency for unprotected multicast while significantly outperforming existing approaches for dedicated multicast protection.