Working with extended keyboard characters

I will be reading a file (file_in) with name & address and a word that I may need to convert. Running unix on a pc, this would be easy. But on my Solaris I am not getting the desired results.

If my file_in contains:

Joe|Smith|123 Main Street|E|Vehicle
Nicky|Dufour|1 Ste. Catherines|F|Vehicle

and my
conversion file is:

E|Vehicle|Vehicle
F|Vehicle|V�hicule

and I want to create:

Joe|Smith|123 Main Street|E|Vehicle
Nicky|Dufour|1 Ste. Catherines|F|V�hicule

which after a whole bunch more programming is ftp'd to my pc network for printing.

I know how to figure this out with awk, etc.. My problem is when I ftp that conversion file to my unix, I end up with wrong characters. In fact, I end up with something like "V\202\hicle" when I vi the file. (Which is correct since the 202 in octal is the e with accent.)
But, this \202 representation garbles during processing and I end up with strange data at the end.

So, I am looking for tricks or hints for my Solaris unix (bash or ksh) to deal with extended characters.
Thanks in advance.

Why don't you zip, ftp (binary) and unzip? Does it still pose same issues?