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Based on my understandings,
10.5 can access to existing TDE.
However, 10.5's extract automatically create HYPER format extract file instead of TDE format.
So, if desktop version is 10.5
- you can use existing TDE, but
- you cannot refresh extract file as TDE format, nor extract TDE format.
TDE is not "automatically" converted to Hyper.
But once it's refreshed with 10.5, it will be upgraded to Hyper, then 10.4 or below version cannot access to that data.
FYI Issue ISS-0133
In 10.5 you are not able to extract to a .tde file; 10.5 will always create a .hyper extract file. If you open an old workbook that has TDE files that you have not yet upgraded, you should be able to publish downward. Once you have upgraded them to .hyper or you have a workbook with newly created .hyper extracts in 10.5, you will not be able to publish to a previous version.