The problem seems to be caused by an inconsistency in CreateXMLFile.writeTheXMLFile(). The header in the generated XML file says that the encoding is ISO-8859-1, but the code the code that produces the output uses the default encoding of the runtime environment.
The attached patch makes writeTheXMLFile() use UTF-8 consistently (and explicitly). This solved the problem for me both in the XML output and in the HTML output. The patch also adds a test case that runs cleanly with the fix, and fails with the following error without the fix:
1) testPlanExporterEncoding(org.apache.derbyTesting.functionTests.tests.lang.XplainStatisticsTest)junit.framework.ComparisonFailure: expected:<...LECT * FROM D4902_BL[ÅBÆ]R> but was:<...LECT * FROM D4902_BL[Ã