I tested alpha-5 (desktop CD) of Kubuntu 8.10 today (completely new intallation, no old /home partition or other baggage).  The problem is not solved.  I noted all the steps I did during the installation:

1) Selected Norwegian Bokmål at the ISOLINUX menu during boot, and chose «Installér Kubuntu» (Install Kubuntu).
2) The GUI installation wizard appeared, in Norwegian.  Norwegian language was preselected. I clicked «Next».
3) In step 2 I chose a timezone of Oslo.  Don't remember what was preselected.
4) In step 3 I chose a keyboard layout of Norway->Norway (USA->USA was preselected)
The rest of the installer did not have any language/locality-related questions.  In the end a summary was shown, saying (in Norwegian) something like this (amongst other things that seemed irrelevant):
Language: Norwegian Bokmål
Keyboard setup: Norway
Place: Europe/Oslo

It then installed fine.

After rebooting the KDM screen shown was in English, so was KDE after I logged in.  I was immediately presented with an error message which went something along these lines:

Error - Plasma Workspace
The file or folder /home/tore/Desktop/ does not exist.

However /home/tore/Skrivebord did exist (the Norwegian translation), so I assume some parts of KDE expect Norwegian locale, while other parts expect American.  The time zone was correctly set to CEST though.  I started a konsole and grabbed the output of "locale":

LANG=nb_NO.UTF-8
LANGUAGE=en_US
LC_CTYPE="nb_NO.UTF-8"
LC_NUMERIC="nb_NO.UTF-8"
LC_TIME="nb_NO.UTF-8"
LC_COLLATE="nb_NO.UTF-8"
LC_MONETARY="nb_NO.UTF-8"
LC_MESSAGES="nb_NO.UTF-8"
LC_PAPER="nb_NO.UTF-8"
LC_NAME="nb_NO.UTF-8"
LC_ADDRESS="nb_NO.UTF-8"
LC_TELEPHONE="nb_NO.UTF-8"
LC_MEASUREMENT="nb_NO.UTF-8"
LC_IDENTIFICATION="nb_NO.UTF-8"
LC_ALL=

Note the discrepancy between $LANGUAGE and $LANG.

/etc/default/locale contains the follwing two lines:

LANG="nb_NO.UTF-8"
LANGUAGE="nb_NO_DZ:nb_NO:nb:no_NO:no:nn_NO:nn:en"

I wonder where "DZ" comes from, it also occurs in Артём Попов's log.  Algeria?  Weird...

Output from «dpkg -l '*language*'»:

Desired=Unknown/Install/Remove/Purge/Hold
| Status=Not/Inst/Cfg-files/Unpacked/Failed-cfg/Half-inst/trig-aWait/Trig-pend
|/ Err?=(none)/Hold/Reinst-required/X=both-problems (Status,Err: uppercase=bad)
||/ Name                                      Version                               Description
+++-=========================================-=====================================-============================================
ii  language-pack-en                          1:8.10+20080527                       translation updates for language English
ii  language-pack-en-base                     1:8.10+20080527                       translations for language English
un  language-pack-gnome-en                    <none>                                (no description available)
un  language-pack-gnome-en-base               <none>                                (no description available)
ii  language-pack-kde-en                      1:8.10+20080527                       KDE translation updates for language English
ii  language-pack-kde-en-base                 1:8.10+20080527                       KDE translations for language English
un  language-selector                         <none>                                (no description available)
ii  language-selector-common                  0.3.8                                 Language selector for Ubuntu Linux
ii  language-selector-qt                      0.3.8                                 Language selector for Kubuntu Linux
ii  language-support-en                       1:8.10+20080703                       metapackage for English language support
ii  language-support-translations-en          1:8.10+20080703                       Additional translations metapackage for Engl
ii  language-support-writing-en               1:8.10+20080725                       Writing aids metapackage for English

As you can see, no Norwegian translations at all.

I'm attaching the contents of /var/log/installer as a tarball.

Tore