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I intend for this to be more of a general discussion than a help topic. I myself find myself flipping through both options in my torrent app. I feel it is a cat and mouse game between me and my ISP. I tend to get more peers and better connections with "prefer encryption". But when I notice my ISP throttling my download, I switch to "require encryption".
What is your preference and why?
Prefer but don't require for the sake of better connectivity. As for ISP throttling, using Socks5 or VPN is better than relying on client encryption because it also stops you from getting dmca notices and what not.
Preferred or required encryption does not help much in term of self-protection when torrenting because data transfer among peers isn't encrypted. ISP can still see you're torrenting.
However, https announce urls will help a little against unwanted eyes. I prefer required encryption.
If you're in a torrenting friendly country, you don't need to care about this preferred or required. Use https announce urls whenever you can.