The answer, as always, is 'It depends'. In this case, it depends on the server setup, whether or not the server is set to use strong (128-bit) encryption only or to fall-back to unencrypted modes of communication if the clients do not support encryption.
According to this article Terminal Services in 2k3 and later default to 'High' encryption status, which means only encryption capable clients (which includes MSTSC.exe) can connect.
If you have administrative access to the servers you're connecting to, you can do this to verify encryption settings (from the same KB article):
- Click Start, point to Administrative Tools, and then click Terminal Services Configuration.
- In the left pane, click Connections, and then double-click the connection whose encryption level you want to change.
- Click General.
- In the Encryption level box, click the appropriate encryption level, and then click OK.
This applies to servers, I know. As for home computers, I cannot find any data specifically regarding the default encryption level.
This other article deals with the newest TS client, version 6.0, and enables the use of a Terminal Services Gateway using SSL/TLS encryption on port 443 to span NAT and firewall devices, as well as using host authentication via certificate. Authentication is only available when connecting to Vista and higher computers, if you have the latest (> 6.0) client.