If all you are looking to do is hide it from spiders, then you could just use javascript to hide the code. In general, it is a better idea to not screw with the data, but rather tweak how it is being displayed (not entirely sure I understand what you are trying to do).
function contact($email, $display="hot_tuna")
{
if( $display == "hot_tuna" )
{
$display = "
display1 = \"" . substr($email, 0, 3) . "\"
display2 = \"" . substr($email, 3) . "\"
document.write(display1 + display2);
";
}
else $display = "document.write(\"$display\");";
$domain = strstr($email, "@");
$name = substr($email, 0, strpos($email, "@") );
$out_put = "
<script language=\"Javascript\">
<!--
emailname = \"$name\"
emailserver = \"$domain\"
document.write(\"<a href='mailto:\" + emailname + emailserver + \"'>\");
$display
document.write(\"</a>\");
//-->
</script>
";
return $out_put;
}