Not this particular symptom, because it seems that all the ISO-8859-1 words in the dictionary are simply skipped.
I played five rounds and did not get a single word with ä or ö in it. Statistically speaking, a bit over 10% of the words in the file words.fin contain a character outside the range a-z (that's 59/486 to be precise, excluding the first line of the file which is just a label) so after seeing a few hundred words, I started to recognize many of them as repeats, but none that had the umlaut vowels (in Finnish, there are not technically umlauts, but you know which I mean).
This is a freshly installed Intrepid amd64 installation, with LANG=en_US.UTF-8 but Finnish keyboard preferences. I also tried LC_ALL=C and LC_ALL=fi_FI.UTF-8 (after installing the Finnish locale via System > Administration > Language Support) to no avail. It won't let me use fi_FI.ISO-8859-1 or fi.ISO-8859-1 or fi_FI.ISO-8859-15 although they're in /usr/share/i18n/SUPPORTED but this is probably a locale problem (see below; notice the error messages from locale).
vnix$ LC_ALL=fi_FI.ISO-8859-1 locale
locale: Cannot set LC_CTYPE to default locale: No such file or directory
locale: Cannot set LC_MESSAGES to default locale: No such file or directory
locale: Cannot set LC_ALL to default locale: No such file or directory
LANG=en_US.UTF-8
LC_CTYPE="fi_FI.ISO-8859-1"
LC_NUMERIC="fi_FI.ISO-8859-1"
LC_TIME="fi_FI.ISO-8859-1"
LC_COLLATE="fi_FI.ISO-8859-1"
LC_MONETARY="fi_FI.ISO-8859-1"
LC_MESSAGES="fi_FI.ISO-8859-1"
LC_PAPER="fi_FI.ISO-8859-1"
LC_NAME="fi_FI.ISO-8859-1"
LC_ADDRESS="fi_FI.ISO-8859-1"
LC_TELEPHONE="fi_FI.ISO-8859-1"
LC_MEASUREMENT="fi_FI.ISO-8859-1"
LC_IDENTIFICATION="fi_FI.ISO-8859-1"
LC_ALL=fi_FI.ISO-8859-1
vnix$ <email address hidden> locale
locale: Cannot set LC_CTYPE to default locale: No such file or directory
locale: Cannot set LC_MESSAGES to default locale: No such file or directory
locale: Cannot set LC_ALL to default locale: No such file or directory
LANG=en_US.UTF-8
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>
Not this particular symptom, because it seems that all the ISO-8859-1 words in the dictionary are simply skipped.
I played five rounds and did not get a single word with ä or ö in it. Statistically speaking, a bit over 10% of the words in the file words.fin contain a character outside the range a-z (that's 59/486 to be precise, excluding the first line of the file which is just a label) so after seeing a few hundred words, I started to recognize many of them as repeats, but none that had the umlaut vowels (in Finnish, there are not technically umlauts, but you know which I mean).
This is a freshly installed Intrepid amd64 installation, with LANG=en_US.UTF-8 but Finnish keyboard preferences. I also tried LC_ALL=C and LC_ALL=fi_FI.UTF-8 (after installing the Finnish locale via System > Administration > Language Support) to no avail. It won't let me use fi_FI.ISO-8859-1 or fi.ISO-8859-1 or fi_FI.ISO-8859-15 although they're in /usr/share/ i18n/SUPPORTED but this is probably a locale problem (see below; notice the error messages from locale).
Also I can't seem to strace the program.
bash$ grep ^fi /usr/share/ i18n/SUPPORTED
fi_FI.UTF-8 UTF-8
fi_FI ISO-8859-1
fi_FI@euro ISO-8859-15
fil_PH UTF-8
bash$ LC_ALL=fi_FI.UTF-8 locale "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" "fi_FI. UTF-8" ON="fi_ FI.UTF- 8"
LANG=en_US.UTF-8
LC_CTYPE=
LC_NUMERIC=
LC_TIME=
LC_COLLATE=
LC_MONETARY=
LC_MESSAGES=
LC_PAPER=
LC_NAME=
LC_ADDRESS=
LC_TELEPHONE=
LC_MEASUREMENT=
LC_IDENTIFICATI
LC_ALL=fi_FI.UTF-8
vnix$ LC_ALL= fi_FI.ISO- 8859-1 locale "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" "fi_FI. ISO-8859- 1" ON="fi_ FI.ISO- 8859-1" fi_FI.ISO- 8859-1
locale: Cannot set LC_CTYPE to default locale: No such file or directory
locale: Cannot set LC_MESSAGES to default locale: No such file or directory
locale: Cannot set LC_ALL to default locale: No such file or directory
LANG=en_US.UTF-8
LC_CTYPE=
LC_NUMERIC=
LC_TIME=
LC_COLLATE=
LC_MONETARY=
LC_MESSAGES=
LC_PAPER=
LC_NAME=
LC_ADDRESS=
LC_TELEPHONE=
LC_MEASUREMENT=
LC_IDENTIFICATI
LC_ALL=
vnix$ <email address hidden> locale
locale: Cannot set LC_CTYPE to default locale: No such file or directory
locale: Cannot set LC_MESSAGES to default locale: No such file or directory
locale: Cannot set LC_ALL to default locale: No such file or directory
LANG=en_US.UTF-8
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>"
<email address hidden>
vnix$ <email address hidden> typespeed
typespeed: main: setlocale