UNICODE-encoded database does not accept umlaut-characters.

Created a new 7.4 database.
# create database foo with encoding = UNICODE;
Then tried to restore my dump from pg 7.2 which was SQL-ASCII or Latin1 
encoded (cant tell which of the two, only got the dump of the old database 
left after upgrading postgresql.)
Succeeded creating the objects, but no data was restored, instead 
postgresql complained about illegal UNICODE characters. Also export of an 
MS-Access Database with pgAdmin 1.6 failed with the same errors.

Created a new database with encoding = Latin1. Everything worked fine.

This is a shame, as UNICODE was chosen to avoid future problems with exotic 
characters. But I cant get it working because of this very problem!

Is this a bug? Any workarounds?

Regards & TIA
Erwin

-- 
no z in my mail.