I've been trying to get this working myself. I saw the steps you listed in your footnote as an example of a basic working test.

1. Master: connect
3. Slave: connect
4. Master: connect
5. Master: do some test DDL and DML operations
6: Master: connect 'jdbc:derby:enctest2;failover=true';
7: Slave: connect
8. Slave: ensure results are as expected

I tried them myself and it does work but the data isn't encrypted. I only get encrypted data in the database files when I specify "dataEncryption=true". As a side effect of that I also have to drop the encryptionAlgorithm and encryptionKey properties and add in the bootPassword property. This then causes problems as some of the replication properties can't be mixed with bootPassword which I found was required to start the encrypted database.

Am I missing something? Is there a way of getting encrypted data without bootPassword?