Is Screen Sharing Version 1.7.2 on MacOS Catalina an Encrypted Connection?
The server software on macOS Catalina does support encryption, but your client needs to support encryption too.

If you're using a standard VNC client to connect with a password only, nothing is encrypted. Not even the password. In this case I would recommend an SSH tunnel as you propose, or other forms of encryption such as an encrypted VPN, encrypted tunnel or similar.

If you're using the Screen Sharing app on macOS 10.8 (Mountain Lion) or later to connect with a username/password or AppleID, everything is encrypted.