dont know if it helps but here it goes:
I had a similar problem with an rss module the solution was this:
from simplepie.org wiki
i added the lines just before "echo $item->get_title(); ?>" line at 163 and 181
"$feed->set_output_encoding('ISO-8859-9');
$feed->init();
$feed->handle_content_type();"
you colud change the "ISO-..." line for any other language.
the answers are here:
http://simplepie.org/wiki/faq/supported_character_encodingsand
http://simplepie.org/wiki/reference/simplepie/set_output_encodingthis information is relative to joomlaworks.gr rss feed module, i cant still get NP to display rss encoded in utf-8 in my site (encoded in ansi for portuguese language) feeds with the same encoding work fine tough.
thanks