I tried to create an issue via XML-RPC with non-ASCII characters. The issue was created, but with exception (see below).
I tried to make the request both with xmlrpc-1.1 and xmlrpc-2.0 - same effect.

org.apache.xmlrpc.XmlRpcException: org.apache.xmlrpc.XmlRpcException: Invalid character data corresponding to XML entity с
at org.apache.xmlrpc.XmlRpcClientResponseProcessor.decodeException(Unknown Source)
at org.apache.xmlrpc.XmlRpcClientResponseProcessor.decodeResponse(Unknown Source)
at org.apache.xmlrpc.XmlRpcClientWorker.execute(Unknown Source)
at org.apache.xmlrpc.XmlRpcClient.execute(Unknown Source)
at org.apache.xmlrpc.XmlRpcClient.execute(Unknown Source)
at org.apache.xmlrpc.XmlRpcClient.execute(Unknown Source)
at com.atlassian.jira.rpc.client.sample.XmlRpcClientExample.main(XmlRpcClientExample.java:56)
at sun.reflect.NativeMethodAccessorImpl.invoke0(Native Method)
at sun.reflect.NativeMethodAccessorImpl.invoke(NativeMethodAccessorImpl.java:39)
at sun.reflect.DelegatingMethodAccessorImpl.invoke(DelegatingMethodAccessorImpl.java:25)
at java.lang.reflect.Method.invoke(Method.java:324)
at com.intellij.rt.execution.application.AppMain.main(AppMain.java:86)