I didn't see the need for highly secure, encrypted display connections in a trusted lan.
Also, there isn't a standard for VNC encryption at all? The password is DES, and the connection unencrypted by default?
If we're talking of the defaults, I believe xdm is more secure than vnc simply due to the linux passwords instead of DES (md5, sha*, or blowfish). Connection is snoopable in both by default, really.