For utorrent version 2.2.1
Enabling protocol encryption
In Utorrent -> Options -> Preferences -> Bittorrent section
Protocol Encryption - disabled, enabled, forced.
Use enabled to encrypt all outgoing data from your client. Use forced to make other clients send you data encrypted if they support it. disabled = no change, you will continue to receive data as is.
For tcp only connections,
Utorrent -> Options -> Preferences -> Advanced
Set bt.transp_disposition value as 29. The default is 31 which allows both tcp and utp connections from your client.
Setting it as 29 will make your client connect via tcp only, data will be shared via both tcp/utp.
i wouldn't recommend installing a proxy on your computer. it wont help in anyway. all it will do is forward the same connections from utorrent (without doing naything to it) to your isp who must be using a proxy on their side. A VPN connection needs to be bought from isp side. you cant do it from your side.