I wrote about this in an earlier post. In short: there's no way to circumvent this problem. The problem is with the Gadget API functions _IG_FetchContent and the XML version of the previous.

One of the Google employees answered that they'll look into the problem with scandics. I couldn't get ä's and ö's to work when I tried to parse an XML file tiwth the ISO-8859-15 encoding.

Google hasn't replied on the issue yet and there was no mention of this being fixed with the update they released a while ago.

So we Scandinavians (is that the correct form? =) just have to wait and see...