The root of the problem as it seems to me is that Roundup doesn't 
process user input as UTF-8 internally. It stores strings in DB as 
UTF8, but doesn't do this for user input.

So, my best guess us that text user input should be converted to 
unicode as soon as it is submitted, and before being output for 
validation.

Where is the code that converts output to UTF8 for database? When does 
it happen?

Attached is a picture of where the error may come from, drawn in 
Inkscape of you want to fix it.