Yes it is possible to have router to router traffic encrypted and protected by IPSec. I have done a number of IPSec implementations and it has worked for me.
If the ping going over does get encrypted but the ping response does not get encrypted, I would think it sounds like the access list which identifies the traffic to be encrypted on the second router is not a close match to the list on the first router. Perhaps you can post the configurations of both routers and we might be able to identify the problem better.
HTH
Rick
HTH
Rick