While I have not yet had a chance to take a look at this product it looks promising. Item level permissions in Document Libraries and Custom lists.
Power up your content and document management feature with spstools
Extend the base features of SharePoint.
Allows users to securely share items for Document Library and Custom List .
Item level security for both Windows SharePoint Services and SharePoint Portal 2003.
Integrated with SharePoint look-n-feel.
Easy Administration anywhere in the SharePoint
The tool is from www.spstools.net, if you want to take a look they have a live demo over on their site.