Correct, they have always been encapsulated in some fashion- the difference with what is now being done is that it's a machine process that encapsulates them in thermoplastic, previously it was a manual procedure that was more subject to error.
The difficulty was to develop a molding process that would not subject the magnets to so much heat that they lost their magnetism. The magnets are very small, so they heat rapidly. Cobalt 2's have been shipping with these newly manufactured magnets, but it is possible that the OP got some of the earlier ones. In reality, this was mostly a problem with early Cobalt 1's, the failure rate of the buttons in recent years of production has been very low as procedures had been well refined. But any time there is potential for human error, there will be some failures, and Atomic is trying to minimize that.
Ron