I've been working with UTF-8 files on the 'nix command-line for years, most recently on OS X.
I've been frustrated that things like cat and head work fine once Terminal is set to display UTF-8 but less doesn't seem to recognize UTF-8 even in that case.
I finally got around asking Google for a solution.
20 seconds later, I found it:
export LC_CTYPE="en_US.UTF-8"
via Notes on UTF-8 and locales
Boy do I feel stupid for not just looking it up earlier!
Anyway, maybe someone else will find that useful to know :-)