As you have noticed currently quip does not have
any support for encodings. It cannot read general
unicode encoded documents but just 8 bit
encodings. Furthermore there is no way, how to
specify the desired encoding for the output file
or to specify the encoding of ther query file
itself. (and there is not yet any section about
these issues in the XQuery recommendation draft.
Therefore, currently QuiP simply assumes that the
output is uft-8, which sometimes is, as you have
noticed, a lie.
To brighten things up: we are currently working
on a unicode version of quip.