This paper discusses high-performance quantum optical circuits for processing polarization entanglement between correlated photon pairs. The primary application of this technology is secure communication links with quantum encryption that rely on the inherent properties of laser light and physical-layer processes in optical components. It can be used for generating identical pairs of encryption keys in quantum key distribution applications, for a variety of encryption protocols ranging from single-photon to multiple-photon, keyed communication in quantum noise, but we see a potential spectrum extending further to include multi-access systems. Success in these applications can be achieved by introducing additional degrees-of-freedom in each single-particle quantum state. We see hyper-entanglement as a very promising approach to do this. The concept is visualized by having multiple entangled photons with specifically assigned frequencies in the 100 GHz ITU grid and arriving simultaneously from multiple sources. Processing of such signals requires hyperspectral optical circuits capable of responding to non-classical features of quantum states. The function of these circuits is to direct the arriving signals along different processing paths to single photon detectors, which can be realized by a combination of different technologies, such as highly selective Lyot filters, dense wavelength division multiplexing, and others. Processing capabilities of these quantum circuits, while seemingly straight-forward in theory, still present a great implementation challenge. Practical operating conditions and characteristics of optical components must be taken into consideration to address the underlying design problems and make this technology feasible. This constitutes the main focus of our paper.