I don't know if you've managed to fix this, but thought I'd share my solution with anyone else who is looking. I had the same problem - the characters were being 'corrupted' in the feed. My code initially (with the problem) was:
<?php include_once $_SERVER['DOCUMENT_ROOT'] . '/inc/simplepie.inc'; $feed = new SimplePie('http://domain.wordpress.com/feed/');?>Seeing the post above, I tried adding the following header and it worked!
<?php header('Content-type:text/html; charset=utf-8');include_once $_SERVER['DOCUMENT_ROOT'] . '/inc/simplepie.inc'; $feed = new SimplePie('http://domain.wordpress.com/feed/');?>I hope this helps someone else experiencing the same problems.