Glad it worked!
There are (I believe) multiple issues with non-USASCII characters that are tripping people up at the moment, hence the confusion.
Both PG and AOLserver have made changes in their locale/charset handling recently. BTW, the PG 7.1.2 RPMs are compiled with --enable-multibyte and --enable-locale, but not (as far as I can see) --enable-unicode-conversion. You can look at the .spec file from the postgresql SRPM to see exactly how the PG RPMs are configured and compiled.
One way to check how your PG installation is set regarding locale is to install the postgresql-contrib RPM, and then run
su - postgres
/usr/lib/pgsql/contrib/pg_controldata/pg_controldata
What you want is to see that the LC_COLLATE: and LC_CTYPE: values shown are both C. If they are, then, at least for single-byte charsets such as 8859-1, PG is fine and you can look at AOLserver if you are seeing 'foreign' chars incorrectly displayed.
Oh, and it looks like PG 7.1.3 was released a few days ago... now I need to check *that* out...
