Is your neighbor in to old cars? Or is he just a cagey old timer?
Chassis welting was very common in the old days of automobiles before rubber body mounts and was used to help spread the body load on to the chassis (taking up minor irregularities) and preventing chaffing of the thin body sheet metal. A quick web search for "chassis welting" found it described as treated or oil impregnated canvas, although I suspect that there are also modern versions available in the hot rod car restoration industry.
Here's a link to a Model A Ford restoration parts specialist that sells chassis welting.
http://www.mikes-afordable.com/page/MFP/CTGY/1042Not much of a technical description, but then I did not spend much time looking.
I have considered using a thin (1/16) layer of rolled rubber strip. If not, then I will do like Zach and use a soft caulking of some sort (something that can be cut thru with a thin wire if the cabin needs to be removed for major repair, heaven forbid

).
The tar coat that many people here use is probably adequate, by itself. The applied sealer method that Zach used might actually add some extra structural rigidity to the trailer frame by tying the cabin in to the frame better (essentially a glue bond to the torsion box).
