WORKAROUND FOUND!
I'm using a 4TB (2TB+2TB RAID0) via Firewire with 10.7.3
The problem seems to be the re-arranging that Filevault2 (aka Core Storage) wants to do to add the EFI partition. It needs that at the beginning of the disk and the step that is failing is the move that provides that space if done via USB and FW. So, very "simple" workaround:
MOVE the first partition start so that it starts at block 409640 (That number was determined by looking at some other FileVault2 encrypted disks.)
I used iPartition, but gdisk or whatever that can do it in place is fine. Note that this can take a very long time (2 and half days in my case!)
Fire up the convert:
diskutil cs convert disk5s1 -passphrase mypassword
and et voilà !
Started CoreStorage operation on disk5s1 mydiskname
Resizing disk to fit Core Storage headers
Creating Core Storage Logical Volume Group
Attempting to unmount disk5s1
Switching disk5s1 to Core Storage
Waiting for Logical Volume to appear
Mounting Logical Volume
Core Storage LVG UUID: XXXXXXXX-XXXX-XXXX-XXXX-XXXXXXXXXXXXX
Core Storage PV UUID: XXXXXXXX-XXXX-XXXX-XXXX-XXXXXXXXXXXXX
Core Storage LV UUID: XXXXXXXX-XXXX-XXXX-XXXX-XXXXXXXXXXXXX
Core Storage disk: disk4
Finished CoreStorage operation on disk5s1 mydiskname
Encryption in progress; use `diskutil coreStorage list` for status
My other option if that had not worked would have been to dig out the eSATA card for my 17"MB and do the conversion first that way, interrupt it and the finish via FW. Not everyone has an eSATA interface or an external device that does both, so I thought I'd be a Guinea Pig to see if it was needed.
Please report back here if this works for you?