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I would suspect your tables are not UTF8 in the database. Really to support characters like that your tables need to be utf8 not latin encoding.
Try redownloading the build and run just upgrade.php not phrases.php
There are some queries in there to change the tables to utf8
I did extensive testing with your icenlandic russian arabic korean chinese etc and all work fine but of course my tables are utf8. My character encoding on my pages is also utf8