Hi,
I have the exact same issue, even though I've formerly been able to use Espionage backups to my Time Capsule. Backups now just execute endlessly, and I can also see the thousands of sparse files that the OP mentioned. I erased my time capsule and did a 200GB Time Machine backup afterwards without any issues subsequently, but I just cannot find a way to get the Espionage based backups to work and ALL of my critical data sits on the encrypted images...

There appear to be 3 rsync processes per backup, it remained there for an entire evening even though the image to backup was not all that large:
ps -ef|grep -i rsync
501 825 224 0 0:00.02 ?? 0:00.02 /usr/bin/rsync -aE --delete --delete-after /Volumes/MacData/data/src/my_image.git/.my_image.git.sparsebundle /Volumes/Data/Espionage/EspionageBackups/niella/-960678611/my_image.git
501 826 825 0 0:00.01 ?? 0:00.01 /usr/bin/rsync -aE --delete --delete-after /Volumes/MacData/data/src/my_image.git/.my_image.git.sparsebundle /Volumes/Data/Espionage/EspionageBackups/niella/-960678611/my_image.git
501 827 826 0 5:07.54 ?? 5:14.21 /usr/bin/rsync -aE --delete --delete-after /Volumes/MacData/data/src/my_image.git/.my_image.git.sparsebundle /Volumes/Data/Espionage/EspionageBackups/niella/-960678611/my_image.git
Worst of all is, it seems I cannot delete the (partial) backup images on the destination drive, since tools like ls just shows "ls: ..DS_Store.zx3EYc: No such file or directory" hundreds of times.
Must say, I'm a bit at a loss as to what to do next.