Getting very off-topic here...

problems.....are based on utf8 anomalies rather than latin1.
Yes. But as I usually stick my nose into those threads (as I had problems in the early days that took me a lot of time to understand) I think I am fairly safe in saying they are ALL due to people going 8859 to utf8 and not doing it 100%/not understanding the chain of data-passing events.

I don't think there is a problem with a new 1.5 install in utf-8.

I assume the decision to go utf-8 as the default install was taken to reduce these conversions/problems surfacing at a later date when people start selling outside their initial territory.

Nonetheless if the latin.1 option is offered at install it should work, which you have proved it doesn't.

For an English-only storefront, what's the business-related decision to go the utf8 route rather than latin1?
None on the face of it, but maybe there will be problems with customers names and addresses using accents.

The whole charset issue is a real Pandoras Box, the best explanation I've seen is this one:
http://coding.smashingmagazine.com/2...haracter-sets/

but in the lack of any real "standard" at all, I think utf-8 is as close as it gets and should be the default setting for any software that sets itself up to be used internationally.