This is that is says in the kb:
FileMaker Pro uses the Xerces-C++ XML parser, which supports XML data in the following character encodings:
This lists the formats Xerses supports and not FileMaker Pro. Also, XML import and CSV import are different functionalities. When you open field mapping for csv import there is a list of formats and ISO-8859-1 is not one of them. Converting to UTF-8 as you mentioned is the way to go.
Doug, there are many idea requests to revise the Import & Export dialogs for more flexibility such as the Character Sets (and the delimiters!). If you have not done, so please vote on them!
Agreed, I wonder while CJK is supported, Europian languages can't import?? How did they work with CSV???
I though ASCII(DOS) or Mac import any charset using system language throughly, but seems not...