It doesn't help either.
I start iterm2. My shell is bash. I switch my keyboard to russian and
press some random keys.
Either nothing happens or an octal escape appers, ex \320 for 'Я'.
Surprisingly, Terminal.app "just works".
This is `locale' output in Terminal.app:
LANG=
LC_COLLATE="C"
LC_CTYPE="UTF-8"
LC_MESSAGES="C"
LC_MONETARY="C"
LC_NUMERIC="C"
LC_TIME="C"
LC_ALL=
This is `locale' output in Iterm2:
LANG=
LC_COLLATE="C"
LC_CTYPE="C"
LC_MESSAGES="C"
LC_MONETARY="C"
LC_NUMERIC="C"
LC_TIME="C"
LC_ALL=
Changing LC_CTYPE or even LC_ALL in the running bash doesn't fix
anything.
BTW, probably I'm missing something but for me this clearly looks like
an issue on the iTerm side, rather than a program's fault to interpret
incoming data correctly.