xml's default encoding is utf-8 so you should interpret it as utf-8 unless a different encoding is specified in its xml element
....and if I remember correctly MAME' listxml output had one or two utf-8 chars in the past which might have been replaced meanwhile...could be a German Umlaut or something...
and don't forget to differ between an utf8/16 text file and its font-representation in editors.....common mistake of thinking something is wrong....:-)