Comment 10 for bug 715547

This is insanely stupd and has been pissing me off for some time now after having regressed back and forth for *years*.

If you don't feel like waiting for someone to actually permanently fix this:
* Edit (as root) /usr/lib/python2.7/site.py (or whatever python version you're using, default in Oneiric is likely this)
* Search for the line 'encoding = "ascii"'
* Change "ascii" to "utf-8"
Now, I have absolutely no idea whatever side effects this will give you, but it works for me. FYI, I'm not using python for anything but bzr (and whatever desktop applications using it), if you're actively using it for important work, this change might be harmful.
Since this hasn't been fixed for quite a few days now, I just had to do the above in wait for a real fix somewhere. Please beware.