id3v2 seems not to care about encodings at all. The ID3 Tag version 1 must always be ISO-8859-1, id3v2 applies the encoding used in the terminal.
Already fixed, same charset-conversion work as #527157/ #559998 (NMU 0.1.12-2.1). Command-line text is interpreted in the system locale and stored as ISO-8859-1 (or UTF-16 when needed) with the correct encoding marker, so terminal bytes are no longer written verbatim; ID3v1 receives proper Latin-1. I'm closing this bug report. Martin