I suppose the setting doesn’'t relates directly to UTF-8. A couple of the things that locale does is the way the date and monetary values are displayed.
Jabber/XMPP spec is already UTF-8. Thefore, Wildfire should already support UTF-8 and there shouldn’‘t be any setting to disable this. MySQL default is not UTF-8, and so you’'ll need to inform MySQL to do so. The perhaps vaguely said UTF-8 setting in the admin tool refers to the setting in the browser. Also, the option to choose language in the admin tool refers to translation only.
You know, I thought XMPP was already Unicode, but I have a user reporting problems with Unicode and Asian character sets. I’'ve asked for more detail (screenshots) so that I can get a handle on the nature of the issue.
I wonder if this is client specific issue. Perhaps you could ask them if they face the same problem when they use clients other than Exodus. In the mean time, you’'d probably want to enable the debug packets in the admin console to see if Wildfire handles those characters properly.