The encapsulation referred to here is that you can expose a safe API that is impossible to misuse in a way that leads to undefined behavior. That's the succinct way of putting it anyway.
The `memchr` crate, for example, has an entirely safe API. Nobody needs to use `unsafe` to use any part of it. But its internals have `unsafe` littered everywhere. Could the crate have bugs that result in UB due to a particular use of the `memchr` API? Yes! Doesn't that violate encapsulation? No! A bug inside an encapsulated boundary does not violate the very idea of encapsulation itself.
Encapsulation is about blame. It means that if `memchr` exposes a safe API, and if you use `memchr` and you get UB as a result of some `unsafe` code inside of `memchr`, then that means the problem is inside of `memchr`. The problem is definitively not with the caller using the library. That is, they aren't "holding it wrong."
I'm surprised that someone with as much experience as you is missing this nuance. How many times have you run into a C library API that has UB, you report the bug and the maintainer says, "sorry bro, but you're holding that shit wrong, your fault." In Rust, the only way that ought (very specifically using ought and not is) to be true is if the API is tagged with `unsafe`.
Now, there are all sorts of caveats that don't change the overall point. "totally safe transmute" being an obvious demonstration of one of them[1] by fiddling with `/proc/self/mem`. And of course, Rust does have soundness bugs. But neither of these things change the fundamental idea of encapsulation.
And yes, one obvious shortcoming of this approach is that... well... people don't have to follow it! People can lie! I can expose a safe API, you can get UB and I can reject blame and say, "well you're holding it wrong." And thus, we're mostly back into how languages like C deal with these sorts of things. And that is indeed a bummer. And there are for sure examples of that in the ecosystem. But the glaring thing you've left out of your analysis is all of the crates that don't lie and specifically set out to provide a sound API.
The great thing about progress is that we don't have to perfect. I'm really disappointed that you seem to be missing the forest for the trees here.
[1]: https://github.com/ben0x539/totally-safe-transmute/blob/main...