Emitting UTF-8 when the settings clearly say "no UTF" is a bug, no matter if a real VT220 is on the other end, or something else that doesn't understand unicode (which is still quite possible, even today). It's even a bug if unicode actually works on the other end (but in that case, nobody notices).
Yes, that's another issue that luckily seems to have been fixed in the linked bugticket.
Still, using antique hardware for interfacing with modern systems is something that would surprise me if I found it used in the wild. I know that the standards are well-defined and that the software support is there - it just certainly isn't the norm.
