viper mode "r" command and swedish character ö

[Lennart Borgman]

I start Emacs with

    emacs -Q

and type some text in the *Scratch* buffer. Then I switch to

   M-x viper-mode

and type "r" (for `viper-replace-char') and then the swedish letter "ö". 
The screen now instead of "ö" shows \366.

This is with GNU Emacs 22.0.50.1 (i386-mingw-nt5.0.2195) of 2006-01-06. 
C-h C gives:

Coding system for saving this buffer:
 Not set locally, use the default.
Default coding system (for new files):
 1 -- iso-latin-1 (alias: iso-8859-1 latin-1)

Coding system for keyboard input:
 * -- cp1252 (alias of windows-1252)

Coding system for terminal output:
 * -- cp1252 (alias of windows-1252)

Defaults for subprocess I/O:
 decoding: - -- undecided-dos

 encoding: - -- undecided-unix