Wow...I'm feeling like the odd man out. Even as a player, a campaign where it is assumed that all encounters are beatable is something I'd fine BORING. If the playres are assumed to win all of the time I don't see the glory in victory or the value of decision making (especially when deciding if the group should fight or try to find a different way).
It's not about all encounters being "beatable," in the sense of victory in combat. It's about having choices as players.
If I put an ancient red dragon in an adventure with a 1st-level party, there's no expectation that the dragon is beatable in combat; but the PCs can choose to avoid it, talk to it, try to bribe it, et cetera. That's perfectly fine.
If I send an ancient red dragon at my PCs to attack them, beat them down, and take them prisoner, without giving them any chance to do anything about it, that's the sort of thing most players don't much cotton to.
Now, the way the OP has laid it out - with the party having a choice to negotiate or be captured - is tolerable, though I would still be a little miffed as a player, since it's a rather heavily weighted choice. I think most of us assumed, from the original post, that we were talking about a situation in which the party is attacked by a superior force, beaten down, and taken prisoner, with no chance to avoid it.