I´m currently having a problem with my system and special characters (using Portuguese - Latin1 layout). I figured out the problem was the character encoding... changed /etc/sysconfig/i18n to ...
... and problems with nano disappeared. However webpages were still showing strange chars. The, I disabled UTF-8 in httpd.conf and webpages look fine. What I would like to know, is if there is a way to disable the UTF-8 system-wide, so that all applications use ISO-8859-1 instead of UTF-8. I believe I can have problems with MySQL and other programs, because of this.