Hmm, may have to reconfigure/rebuild MySQL on this box...
I ran into a problem on the DESTRealm forums where extended ASCII was causing unusual behavior and premature escapes from submitted text. Try it--plop in an accented 'e' in a post (ALT+0233) and hit reply. You won't see anything or it'll cut off at the point where the extended ASCII character was detected. Apparently this is a problem with MySQL and UTF-8 support, but I don't know if there's any other work around. I suspected it may be the version of phpBB, but being as this version and the one on DESTRealm.org are behaving the same way, I can't see it as the version alone...
I may have a work-around for it, but it will require some research. In the interim, there's only two possible solutions: avoid posting extended ascii (which also means auto-replacement characters, such as an ellipsis) or change the charset to latin1. I wound up doing the latter, but I don't think that's the best solution.