Using telepathy-inspector, I registered a test account. I ensured that require-encryption was true and old-ssl was false. The following debug excerpts appear to show that Gabble doesn't bother doing <starttls/> before sending the desired username and password in the clear:

(telepathy-gabble:28074): tp-glib-DEBUG: tp_cm_param_setter_offset: old-ssl = FALSE
(telepathy-gabble:28074): tp-glib-DEBUG: tp_cm_param_setter_offset: require-encryption = TRUE
(telepathy-gabble:28074): tp-glib-DEBUG: tp_cm_param_setter_offset: register = TRUE

SEND:
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<?xml version='1.0' encoding='UTF-8'?>
-----------------------------------

SEND:
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<stream:stream version="1.0" xmlns="jabber:client" xmlns:stream="http://etherx.jabber.org/streams" to="localhost" id="200857733695">
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RECV [173]:
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'<?xml version='1.0'?><stream:stream xmlns='jabber:client' xmlns:stream='http://etherx.jabber.org/streams' id='3705431228' from='localhost' version='1.0' xml:lang='en'>'
-----------------------------------

SEND:
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<iq type="get" id="278545803186"> <query xmlns="jabber:iq:register"></query>
</iq>

-----------------------------------

RECV [271]:
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'<stream:features><starttls xmlns='urn:ietf:params:xml:ns:xmpp-tls'/><mechanisms xmlns='urn:ietf:params:xml:ns:xmpp-sasl'><mechanism>DIGEST-MD5</mechanism><mechanism>PLAIN</mechanism></mechanisms><register xmlns='http://jabber.org/features/iq-register'/></stream:features>'
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RECV [216]:
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'<iq from='localhost' id='278545803186' type='result'><query xmlns='jabber:iq:register'><instructions>Choose a username and password to register with this server</instructions><username/><password/></query></iq>'
-----------------------------------

SEND:
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<iq type="set" id="333971867831"> <query xmlns="jabber:iq:register"> <username>snthsnthsnthsrnhsth</username>
 <password>snthsnthsnt</password>
</query>
</iq>

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RECV [182]:
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'<iq from='localhost' id='333971867831' type='result'><query xmlns='jabber:iq:register'> <username>snthsnthsnthsrnhsth</username>
 <password>snthsnthsnt</password>
</query></iq>'