In the lasted version (1.1.4), when you try to install Vanilla for the first time using an UTF8 database, the setup wizard seems to mess up with foreign chars (latin-1 setup ?).
For example : I entred "bébé" (french accents) for the forum name. After the installation i had "b?b?".
To make it work, I had to return to the admin and rename the forum.
same with other info (Support Contact) used at installation. I would suspect passing form data to Settings/ConfigurationManager in installer or somewhere there, because it seems to me that Settings/ConfigurationManager handles UTF8 fine if you can rename it in admin after install and it works.
I looked at the page encoding of the installer : iso-8859-1.
I manually changed the encoding of the page (blabla.../setup/installer.php?Step=3&PostBackAction=None) to UTF8 and everything worked fine. I saw "bébé" at the login screen.