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It’s looks like it’s the htmlentities2() function, which encodes some characters as numeric entities (e.g. ampersands become &). See changeset r520. I’ll look into it, it shouldn’t be breaking those characters.
I’m putting a fix into trunk and the 2.1 and 2.0 branches now, replacing htmlentities2() with the htmlspecialchars() function, which only converts characters with a special meaning in HTML. Thanks for reporting this guys, obviously a big problem for users of non-ASCII characters.
This is now fixed in the repository, see changesets r595, r596 and r597.
I’ll probably put out a 2.1.1 release in the next few days, but until then you can apply the change yourselves very easily. Just open up the template_helper.php file and change this line in the tarski_navbar() function
htmlentities2($page->post_title)
to this
htmlspecialchars($page->post_title)
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