iso-8859-1 characters in psql

Hello,

I want to have iso-8859-1 characters to be displayed in psql.

I am using Linux with german umlauts enabled, meaning my console is set to
iso8859-1 and readline accepts �,�,�,� etc. My Database encoding is UNICODE.
The inserting of umlauts works, and there are umlauts in the database
tables.

When i use client_encoding=UNICODE, "select * from kunden where ...foo...."
returns "täst" instead of "t�st", so it seems like a dump of the internal
utf-8 encoding. It is OK, because of course my linux console is using
iso8859-1 and not unicode, like stated in the variable, but okay...

When i use client_encoding=iso-8859-1, "select * from kunden where
...foo...." returns "tst" instead of "t�st", so it seems hat the characters
get dropped instead of beeing converted.

Is it possible to have psql behaving correctly?
Or would it normally behave correctly, and i have another problem with my
system, like some locale configuration error?

cheers and thanx,
Mig-O