There seems to be some confusion about the XMPP definition of OTR as defined in XEP-0136 which does not mention encryption (http://xmpp.org/extensions/xep-0136.html#otr) and the colloquial use of OTR which apparently means "encrypted IM."
AFAIK there is no defined standard or agreed-upon XMPP extension for the latter. I should have clarified this in the original comment.
The only way for fully encrypted conversations is to use a plugin that encrypts messages themselves, or use an ecrypted P2P IM network.