APCO P25 supports encryption out of the box, and that's what 'backwards' forces like the Queensland Police Service have been using for YEARS. When word came out that the QPS were moving to digital many truckies and tow-truck operators went and bought P25 scanners from the USA. This turned out to be an expensive exercise, with encryption rendering them useless
The local media bitched and complained, but the biggest benefit is that you can have a car accident and not be swamped by tow-trucks vying for your business (and their 'gentle encouragements'). Oversight was achieved by having the clear-speech conversations all recorded at police HQ.
As for interoperability, New South Wales police were up in Brisbane following the floods helping with law and order and they had their radios too. I guess it is just a matter of authorities sharing keys, or having a common key established up front. When Australian police forces went to New Zealand to help following the Christchurch earthquake in February they could use their radios. Tait Electronics and others set up programming stations and as long as the frequency coverage was there, the radios could be used.
I use an 800MHz TETRA system with the State Emergency Service (like the US CERT, but state based) in Brisbane. This is not encypted (not all TETRA is), but there are very few scanners out there. Unfortunately this is incompatible with the 460MHz UHF system that the rest of the SES in Queensland use, so when we have teams from out of Brisbane we need to operate two networks. The text messaging feature of TETRA is very good for passing job information (flood evaculations, storm damage to houses, missing person details) that is not audible to people around you. Having an encrypted radio is not private if the volume on the speaker is very high and the media are within earshot.