Have a quick read through this post:
https://www.ubbcentral.com/forums/ubbthreads.php/topics/255103#Post255103

Basically, you can do #1 with absolutely no problems.

Quote
update the language files / header meta tags from "iso-8859-1" to "utf-8" @
Control Panel > Languages > Language Editor > generic.php > CHARSET

This has no affect on the database and anyone can do this. It just simply tells browser/crawler what character set to expect/display the page as, rather than leave decision up to the browser/crawler to determine.

current developer of UBB.threads php forum software
current release: UBB.threads 8.0.1 // wip: UBB.threads 8.1.0
isaac @ id242.com // my forum @ CelicaHobby.com