You are probably right. I think it's a shell issue. With zsh i can write "ÅÄÖ" , but an ls command still shows the swedish file names with ?? instead of the right characters. Even if it looks ok in the finder.
In zsh I have to choose Latin-1 to get it to work, but then if I cat a textfile with swedish chars, the show up as ??? If I choose MacOS-Roman , the cat works ok, but then I cant input any swedish chars... So it's a mess. I sure hope this is fixed in Jaguar.