It looks like the SAX-Parser instantiated in the validation-class can't handle 
page encodings other than UTF-8.
Or maybe the org.apache.jasper.compiler.XmlOutputter has to add a line like
<?xml contentType="text/xml; encoding=ISO-8859-1 ?>
For sure the given ecoding should match the encoding of the page found in a
<%@ page%> statement, at least a configuration-parameter will do the job.

A workaround could be to use the html-tags for what html call uuml, ouml szlig 
and so on, but e.g. the InternetExplorer 5.0 and 5.5 has bugs with this and 
can't handle these tags as button-label-taget (input type=submit 
value="löschen") and in the html-head-title tag.

Maybe one might think this is not a "major" bug, on the other hand, souldn't 
the system be character-encoding-safe at all.