Testing the vile 9.8v-2 package on my Debian machine I get some decidedly odd behaviour:
The following sequence:
<Compose>l- <Compose>e' <Compose>c,
is rendered in vile as:
\?A3\?E9\?E7
outside of vile, in the same terminal that appears fine:
£éç
which would suggest that vile doesn't handle UTF-8 at all, although as Chris noted, entering those three characters using C-v x <hex> works fine, and renders in vile correctly.
Even more odd, *other* characters work fine with compose in vile:
<Compose>## <Compose><" <Compose>e,
for example input fine, and appear in vile as expected:
♯“ę
xvile is similarly odd, and launched as:
xvile -xrm '*font: -misc-fixed-medium-r-normal--13-120-75-75-c-80-iso10646-1'
behaves in the same way: using compose, ♯“ę works, but £éç does not. Similarly, the latter does work using C-v x <hex>.
Things are more screwy with the Debian shipped app-defaults (hence the -xrm flag), which uses "8x13" that turns out to be an alias for the 8859-1 variety of that misc font, not the unicode one. That however is my fault, and I'll fix that in an upload shortly.