I would like to sync my iPhone to iTunes over Wi-Fi but only if the process is encrypted for privacy. I'm still feeling a lack of trust after learning that MobileMe synced personal data across the Internet unprotected. Is the sync encrypted?
iTunes Wi-Fi Sync does not use encryption as it is performed on your local network only.
Your data is not transferred over the internet, so it's as secure as your local network is.
(The link about MobileMe is extremely old; Yahoo! Mail and Windows Live didn't use HTTPS.)
It's entirely up to you whether or not it's encrypted. It uses your local wifi network, which you can configure however you want. If you configure it to be encrypted, by setting up WPA2, then it's encrypted.