I believe that the issue is the feature set of the code that you are running. (not necessarily the version of code but the feature set) You appear to be running the IP or IP BASE feature set and I believe that VLAN trunking is not supported in that feature set. If you upgrade the feature set to PLUS or something like that I believe that you will get support for encapsulation and VLAN trunking.
If you are going to be changing code a newer version of code might be nice. But the important thing is the feature set.
 it looks like Edison's research was more thorough than mine and that you do need a version upgrade. I still think that there are issues about support for VLAN trunking in the IP BASE feature set.
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