msxsl encoding bug?

Anyone encountered this before,
when I run the following xslt over an xml file using the commandline msxsl.exe


<?xml version="1.0" encoding="utf-8"?>
<xsl:stylesheet 
  xmlns:xsl="http://www.w3.org/1999/XSL/Transform" version="1.0"
  >

<xsl:output method="xml" encoding="UTF-8" omit-xml-declaration="no"/>

<xsl:template match="/">
<xsl:copy-of select="/"/>
</xsl:template>

</xsl:stylesheet>

and the xml file only has the english character set then the output has an xml
declaration of utf-8 but the actual content of the document is ANSI
if the xml file has other than the english character set then the output has an
xml declaration of utf-8 and the actual content of the document is utf-8.

Has anyone ever observed this bug before? 


-- 
Bryan Rasmussen