I'll copy my usual I18N rant from the devel list below:

There is another set of problem with ISQL (which also applies to some
3rd
GUI tools, AFAIK): character sets

- It's not Unicode

- It's add a third character set to the character set confusion, users
experience (typical support dialog: "Did you set the database default
character set to CP1250? Did you set the connection character set to
CP1250?
Ah, and did chcp 1250 on the command line? BTW, you've selected Lucida
Console for your command line?")

In more optimistic days I thought it would be easy to recompile ISQL for
Unicode, but ISQL just pulls in too much server code, to make it easily
changeable - for me at least.

Regards,
Peter Jacobi